US Dollar Index: Upside Case from Flows and Yields – BBH

Brown Brothers Harriman (BBH) strategist Elias Haddad outlines an upside case for the US Dollar Index driven by capital flows and yield dynamics.

Foreign investors sharply increased their purchases of long-term US securities in April. Over the past year, these inflows have more than offset the US trade deficit, providing structural support for the dollar.

Haddad points to relatively attractive US yields as a key factor pulling foreign capital into Treasuries and agency bonds, reinforcing the greenback's strength.