Forex Flash: Few factors standing in way of USD growth status – UBS

Many longer-term participants in the FX markets have started to express satisfaction of late that after many years of frustration, the USD/JPY is finally starting to move, or the BoJ/Japanese government is getting its act together. “While valid, this view perhaps gives too much credit to the Japanese drivers, while the dollar side of the argument is often overlooked.” writes Research Analyst Gareth Berry at UBS.

If the economy, notwithstanding the fiscal issues at hand, had not performed to the extent that markets have been willing to even defy Fed commentary on stimulus provision and nudge Treasury yields higher in addition to pushing equity markets to record highs as of this week, then something has to be going right. So long as current macroeconomic and financial conditions can hold, what's to stop yield and growth-starved European and Japanese investors from pushing more money into the US and propelling the dollar to growth status?