After moderate losses in the first two months of the year, the US dollar may now be one of the most attractive investment assets. Dollar bulls started the year anticipating a quick trip to higher prices, instead the dollar fell against many of the world’s major currencies. For example, the dollar fell 3.0% against the Japanese Yen in the first two months of the year. This dollar weakness has primarily stemmed from the perception of a less robust than anticipated US economy and the resultant fears that the Federal Reserve Bank might continue Quantitative Easing apace. Notwithstanding these fears and sluggish trading so far in 2014, the dollar remains an attractive asset based upon these five reasons: tapering, better US economic growth, other central banks' dovish stances, futures positioning, and safety bids.
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