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Valuation to limit the US dollar’s upside – ING

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 3, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at ING, suggests that the main reason they are not more bullish on the USD in 2016 is the valuation constraint.

    Key Quotes

    “Based on our medium-term BEER valuation model, the real USD is some 8% overvalued relative to medium fundamentals. We see the USD upside as most limited against Europe and Japan, with the most likely surprise coming in USD/Asia should the PBOC allow a larger depreciation of the CNY in the face of stronger US rates.”

    “One final remark for 2016. November sees US Presidential elections. Democratic Administrations have generally been associated with a stronger dollar. Major US corporate tax reform in 2017 would probably be the main risk to our bearish USD view.”
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