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#1 04-02-2019 16:34:30

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USD: the dollar's weakness on the forex should persist (NBC)

USD: the dollar's weakness on the forex should persist (NBC)

NBC bank explains that the US dollar could experience occasional rebound episodes, but they still expect a downward trend for USD over the coming months.

"The trade-weighted US dollar started in 2019 as it ended last year, in pain. The return of risk, illustrated by the rise of the global equity markets in January, benefited the largest currencies at the expense of the stronger dollar, with the latter posting a third consecutive monthly drop in trade-weighted conditions. The risk sentiment and the resulting difficulties for the greenback are largely due to the Fed's more conservative tone. With respect to developments in the global economy and financial markets and their potentially negative implications for the US economy, the Fed is indeed convinced that it will need to adopt a less aggressive strategy of policy normalisation. However, domestic issues, including the potential for a reversal of the already flat US yield curve, probably also played a role in the Fed's position shift.

A flat yield curve associated with a near-neutral federal fund rate reduces the Federal Reserve's ability to further tighten US monetary policy. Thus, while the US dollar may experience occasional bouts of strength - for example coinciding with Fed signals or the return of risk aversion, we continue to expect a mostly downward trend over the greenback's forecasted horizon."

"Anything worth having is worth going for - all the way." - J.R. Ewing



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