July 2014 marked the turning point when the long awaited rally in the dollar finally arrived. The greenback then rallied around 10% against a basket of global currencies as shown below as shown in the chart below.
That may sound a lot but if we put it into a context, the dollar has been on downward trend since the 1980's, as shown below:
Economists are almost unanimous (which is always dangerous – see later in this article) in their positive outlook for the US economy and the strength of the dollar in 2015. As the US economy strengthens the Federal Reserve is expected to raise interest rates by mid 2015. Higher rates make the dollar relatively more appealing to hold, so driving demand and the currencies relative value up. Conversely, other central banks (i.e.
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