We believe the US dollar has bottomed after a decade of weakness (see Weekly Chart, page 2) and see several reasons why its strength will continue. First, the US economic recovery is gaining steam, led by business spending and, at long last, housing. Second, the US rebound is occurring at the same time its major trade partners are experiencing weaker economic growth. Third, as a consequence, US monetary policy is likely to become incrementally more restrictive to other developed market currency blocs.

David Fuller's view This is an interesting issue, including the two graphics which many of us have not seen previously.