Dollar cycles tend to last eight years, implying another five years to run - Credit Suisse

The US dollar is in a secular bull-market. Given that dollar cycles tend to last eight years that means we have another five to go, say analysts at Credit Suisse in a note issued on Tuesday.

The US trade weighted index is up by 21% so far versus an average rise of approximately 50% during a typical cycle.

“Real rates and PMIs point to Eu/$1.20 but further out, we think the euro might have to weaken another 10% to generate the inflation the ECB needs.”

The Swiss broker also sees downside risks to sterling, which should be at 1.44 versus the ‘greenback’ on a purchasing-power-parity basis (if sterling and the US dollar had the same purchasing power in terms of real goods).