The U.S. Dollar Is Still Very Overvalued Versus Several Currencies

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February 2, 2017 7:05am NYSE:UUP


From Eric Bush: The stronger dollar is flowing through into our purchasing power parity (PPP) CPI differential models. Overall against 18 currencies, the USD is overvalued against 12 of them on a PPP basis.

What is crucial is that the USD is overvalued against many of its largest trading partners. Of the currencies listed in the title of the blog post, the USD is just slightly over valued against a few (KRW, CHF) to vary overvalued against some of the others (JPY, EUR, NOK, SEK, GBP). Below is a chart for each currency.

The PowerShares DB US Dollar Index Bullish (NYSE:UUP) was unchanged in premarket trading Thursday. Year-to-date, the largest ETF tied to the value of the U.S. dollar has declined -2.68%, versus a +1.83% rise in the benchmark S&P 500 index during the same period.

UUP currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #13 of 25 ETFs in the Currency ETFs category.

This article is brought to you courtesy of Gavekal Capital.

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