Larry Kudlow makes a strong case that the US dollar has turned:
At the turn of the new year the vast majority of pundits expected the dollar to continue to slide. Yours truly disagreed, arguing that lower tax-rates, monetary restraint, and solid economic growth was a prescription for a dollar rebound. Since December 30, both the broad and the narrow dollar indexes have appreciated more than 3 percent. The dollar-euro cross rate has improved 3.5 percent in favor of the greenback.
And commodities have hit the skids. Gold is off 5 percent, spot metals are off 4.5 percent, futures are off 2.5 percent, and the broad spot commodity index is off 4 percent. The net drop in oil since late October has been nearly 20 percent. The fall in the Baltic dry index (raw material goods shipping) has been 29 percent. On the oil front, the tanker rate on the Arabian Gulf to Singapore route has dropped 77 percent since early November.
Shortly after the November election, in a media opportunity in the Oval Office with Italian President Silvio Berlosconi, President Bush linked his fiscal policies of lower taxes, Social Security reform, and intensified budget restraint to the Fed’s efforts to drain excess cash and raise their target rate. Bush explicitly mentioned the need for a stronger dollar. This was the first time the President had taken this up, and the first time he linked his fiscal strategy with the Fed’s monetary restraint. Most folks ignored this signal. They shouldn’t have.
Kudlow’s post is worth reading in its entirety.