Bloomberg has reported that dollar bulls are nearly extinct down to just 2.3 %. The majority, which is always wrong, are all focused on the nonsense of the budget and the current account deficits. The record high for the dollar was 1985 when even the British pound fell to $1.03. So the balance of payments went negative from 1980 to 1986 and the dollar rose. OMG!How was that possible? When you actually correlate the Balance of Payments with the dollar, something amazing emerged. The dollar rises with the balance of payments going negative. Gee whiz! That is against all perpetual bear’s reasoning.
Perhaps this magical logic is just sophistry because they use their theory and don’t bother to check if it holds up over the course of time. I have been warning countless times that the Balance of Payments is by no means simply TRADE. It includes all flows of capital outward. That includes interest. The biggest trade deficit of the USA is not with Europe, but China, who just so... Larger Chart