$9 Trillion Short means $Dollar goes Higher

Oil is priced in dollars.  PB
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From BloombergView.com:

Investors speculating the dollar rally is fizzling out may be overlooking trillions of reasons why it will keep on going.

There’s pent-up demand for the U.S. currency that will underpin years of appreciation because the world is “structurally short” the dollar, according to investor and former International Monetary Fund economist Stephen Jen.

Sovereign and corporate borrowers outside America owe a record $9 trillion in the U.S. currency, much of which will need repaying in coming years, data from the Bank for International Settlements show.

In addition, central banks that had reduced their holdings of the greenback are starting to reverse course, creating more demand.

The dollar’s share of global foreign reserves shrank to a record 60 percent in 2011 from 73 percent a decade earlier, though it’s since climbed back to 63 percent...

Most strategists and investors agree on the reasons for the dollar’s advance versus each of its major counterparts during the past year: the prospect of higher U.S. interest rates while other nations are loosening policy...

Chris Turner, head of foreign-exchange strategy at ING Groep NV, sees the dollar surging through parity with the European currency by mid-year, from $1.0586 per euro ... He said gains will be spurred by bonds from Germany to Ireland yielding below zero.

“Central banks are re-accumulating their dollar reserves and low, or negative, bond yields in the euro zone will probably speed up that trend,” said London-based Turner, whose bank topped Bloomberg’s rankings for the most accurate currency forecasts in the past two quarters...

Billionaire Bill Gross of Janus Capital Group Inc. has meanwhile been betting on U.S. Treasuries against German bunds on the basis that the spread between American and European interest rates will narrow. He called his bet “the trade of the year.”
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Link: http://www.bloomberg.com/news/articles/2015-04-12/the-9-trillion-short-that-s-seen-sending-the-dollar-even-higher