FXstreet.com (Barcelona) - The Dollar has being sold heavily, weighed by sings of deceleration on US economy, with USD/CHF reaching all-time lows, and USD/JPY eroding 80.00 area. However, the UBS Economics Team advices caution to USD bears, as US economy might gather pace in the second half of the year.
Recent US economic slowdown has been due, in big part, to external factors, rather than to an inherent weakness, according to the UBS Economics Team: "Clearly, some of America's renewed economic weakness is due to the impact on supply chains from Japan's earthquake, recent storms in the US and adjustments in inventories."
However the UBS Economics Team observes US economy picking up over the next months: "America's economy will still rebound in the second half of the year, pointing to improving bank lending and now receding energy prices. Manufacturing ISM may have plunged last month. But May's non-manufacturing ISM data rose to 54.6 from a 52.8 reading in April."
With Eurozone financial crisis far from solved and inflation figures accelerating, the end of Fed's quantitative easing programme, might trigger a Dollar rally similar to the one seen in 2008, "when it became clear the global economy rather than just America's was also being adversely affected by the credit crunch."
