Futures Now

Three reasons not to bet against the dollar: Strategist

Dollar surge is just starting: Strategist
Futures Now, May 28, 2015
Calling the close

The is already up more than 7 percent year-to-date, but according to one currency expert, the rally is just getting started.

"The trade here is to ride the dollar higher," FX strategist Kathy Lien said Thursday on CNBC's "Futures Now." Lien points to three reasons why investors should not buck the trend.

"I think that the Fed tightening story is the main one that is going to continue to drive the dollar." Lien added that blowout pending home sales and improving economic data will support a September rate hike.

"At the end of the day, data is improving and the language from the Federal Reserve is very consistent. They are going to raise interest rates," said Lien, managing director at BK Asset Management. "So I do think the greenback moves higher." Although she added that she expects the rally to lose steam post-hike.

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Secondly, Lien said that the collapse in the Chinese stock market could "drive demand for dollars." The plunged more than 6 percent Thursday, ending its seven day winning streak and sending China's stock market rally to a screeching halt. The Shanghai Composite it up 43-percent year-to-date.

Lien also said that fears of a Grexit will persist, and that should weigh on the euro. "Greece continues to be a constant headache for the euro zone," said Lien. "But I think that even if they're not going to pay the bills, they're not going to kick Greece out of the euro zone as well because the consequences are too severe for the region." Lien added that continued weakness in the euro against the dollar will ultimately drive the index higher.

Inevitably, said Lien, the dollar trend is still very much positive, and will continue to flourish, at least throughout the rest of the summer.