Shaun Cochran

Japan has a very strong economy with a large amount of capital deployed offshore; tightening global credit conditions would prompt repatriation, putting upward pressure on the yen. Unusual inflationary pressures in Japan and the market's failure to respond yet create a base case where the yen finds a floor and rallies.

Global credit conditions are deteriorating, which increases demand for high-quality collateral and over time creates demand for the U.S. dollar. Tactically, the dollar is bullish despite it not being cheap relative to global currencies.