USD strength or USD weakness? Where is the USD heading?

My recent attendance at a SCCCI morning breakfast seminar on foreign exchange reflected a view that the USD is likely to head further southwards over the next 12 months. The seminar was delivered by speakers from Credit Suisse (private bank); Mr Joseph Tan, Asian Chief Economist and Mr Emmanuel Lim, Head of Advisory & Sales on FX and Commodities.

Their 6 reasons for supporting the (Credit Suisse) in-house bearish view on the US Dollar:

1. USD is Overvalued, according to Credit Suisse in-house valuation model;
2. External force: Current Account deficit (though narrowing, but still a sizeable significant deficit);
3. Internal stress: Unsustainable debt created by Fed’s ballooning balance sheet via flooding of dollars into market;
4. Low Interest rate, where investor is not compensated adequately for risk on USD holdings;
5. Trend of Reserve currency diversification by major economies;
6. Correction: short term correction via money flows (to ‘safe haven currency’) does not detract from longer term fundamental weakness.

Another takeaway was the bullish outlook on commodities (e.g. precious metals, agriculture crops, base metals and energy materials). This was the case as during periods of USD weakness, commodities had a tendency to outperform. A forex inference would be looking at countries whose economy GDP depend much on commodities export. A good example is the Australian dollar.

If true, this is probably good news for those who shop extensively on the Internet and ship their purchases from United States.