Cool Video: CNBC Clip Tactical and Strategic Dollar Outlook

I appeared on CNBC earlier today to talk about the dollar.  I was given the time to briefly sketch out my view of the dollar.  Near-term, I am concerned about the political and economic events in September,  but I am looking for a better Q4 for the greenback.

I have not given up the idea that the dollar’s pullback this year is a correction to the bull move that began in mid-2014.  The euro and the Dollar Index approached but have not surpassed a 50% retracement of that bigger rally.  Also, I believe that divergence theme is very much intact, even if obscured by other developments.  I anticipate the Fed’s balance sheet to shrink by about $180 bln by the middle of 2018, in which time I project the ECB’s balance sheet to expand by another 420 bln euros.  The Fed funds target may rise two-three times by mid-208, while the ECB’s minus 40 bp deposit rate may not be raised at all.