Institution: U.S. growth prospects expected to drive further dollar strength

As U.S. economic growth strengthens and market concerns over Federal Reserve independence ease, the dollar's outlook has improved, prompting Lombard Odier & Cie to turn bullish on the dollar, reversing its previous bearish stance. The firm cut its euro-to-dollar forecast from $1.14 to $1.09, raised its dollar-to-Swiss franc forecast from 0.83 francs to 0.85 francs, and shifted its view on the dollar against emerging-market currencies to neutral. This is Lombard Odier's latest move to further soften its bearish dollar stance; in June, the firm raised its dollar allocation recommendation from underweight to neutral. "Over the past month or so, the Fed's credibility has improved, after the market spent a full year questioning its independence," Lombard Odier global FX strategist Kiran Kowshik said in a note to clients, adding that "this reversal may have room to run further."