TD says the dollar rally is on its last legs

The US dollar is the second-best performing G10 currency this year, narrowly trailing the Swiss franc. But analysts at TD Securities say the best is probably in the rearview mirror.

They cite a few reasons:

1) Economic surprises have begun to ebb. The US economy is strong but "a lot of the good news is in the price. Fresh catalysts will be needed to inspire meaningful USD gains from here."

2) The Fed. They say the Fed is near neutral and other central banks are becoming more hawkish.

3) Global growth has regained momentum and that will be a renewed focus of markets late in the year.

4) USD positioning is crowded and valuations are expensive.

5) Funding the external deficit will become a problem and the twin deficit story has returned with a vengeance and that will be more of a story in 2019 as the BOJ and ECB allow the long end to rise.

6) Political turmoil undermines confidence in the US dollar and trade risks unexpected consequences.

Personally, I like the theme of a shift towards global growth, which will also underpin commodities. I think the animal spirits are really starting to come out.