Deutsche Bank: 11 Year Bear Cycle is Long in the Tooth, Expect a Violent Turn in the Greenback

“….Historically US dollar cycles persist for an average of seven years, hence the current bear cycle in the US dollar is in its 11th year, and consequently should be viewed as long in the tooth. This has important implications for commodity markets not least given the growing correlation between risk assets since the onset of the financial crisis. Turns in the US dollar following bear cycles can be violent. For example, when the dollar turned in July 1980, the dollar appreciated by just over 40% within the following 12 month period. Given the ongoing weakness in the US basic balance we expect a turn in the dollar is some way off and that the US dollar will display weakness in the first half of this year.

Below is a chart showing the U.S. dollar’s decline over the last decade:

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