Revisionist History: Suddenly Everyone Was Betting On Strong Dollar All Along

Read here:

There’s at least one thing that bulls and bears on the U.S. economy agree on: the dollar, the most undervalued major currency in the world, is due to rise as Europe’s sovereign debt crisis threatens the global recovery.

Strategists who as recently as November were predicting the dollar would depreciate against currencies of the Group of 10 nations, now say it will climb by year-end. After weakening against all but the Mexican peso among its 16 most actively traded peers over the past decade, it has gained against 14 of them since February.

Bulls say the dollar will benefit from increased U.S. hiring and an economy that’s projected to grow 2.3 percent this year, almost double the 1.26 percent for the Group of 10, according to Bloomberg surveys of economists. The currency will also gain if global and U.S. growth slows as Europe’s debt crisis worsens, boosting demand for dollar assets such as Treasuries as traditional havens from market turmoil diminish.

“We’ve become more bullish on the dollar because the economic prospects in the U.S. are improving,” Ken Dickson, an investment director of currencies at Standard Life Investments in Edinburgh, which manages about $235 billion, said on April 18 by telephone. “There are additional reasons including problems in the periphery, and a weaker euro is required to help the transition to a better economic situation in Europe.”