The slow turn of February became a true move in March as dollar weakness continued especially against the euro. The structural problems of the US economy which first began to surface in the prior month, exacerbated in March as Trade Balance deficit approached -$70 Billion while the TICS data failed to offset the gap for the second month in a row. Unless US data improves materially in the upcoming months, market focus will likely change from growth and interest rate expectations back to the concerns over the US balance sheet position – a prospect that bodes darkly for dollar bulls as we move into Q2 of 2006.
Boris Schlossberg
Senior Currency Strategist
Senior Currency Strategist
