Tom Keene Talks to Nomura's Jens Nordvig

Has the dollar overshot?
The dollar has definitely weakened more than is typical.

What's going on?
Higher oil prices are clearly something that is negative for the dollar. And there is evidence that global central banks are accumulating reserves at a steady pace. But they are accumulating fewer dollars, so there is some kind of diversification trend going on in the background as well.

We've also seen record prices for gold and silver. Is there a connection to the dollar's drop?
I think they have a common theme—a very broad-based concern about the debt levels in major economies around the world. The clearest metric of that is the Swiss franc, which just hit another high against the dollar. We have a bunch of models that we run, and according to them the Swiss franc is way too strong.

Do you just see the dollar drifting lower and lower?
It is hard to see the catalyst for a real turnaround in the dollar. That doesn't mean we cannot get a couple of weeks of short covering and a decent bounce. But the trend, I think, still looks to be down. Going into this year there was some optimism about U.S. growth, and it has not really come through. Even trade, where we saw some positive trends in the fourth quarter of last year, disappointed in the first quarter.

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