USD: Is dollar's decline done yet? (BNP bank)

The Fed has met BNP's dovish expectations, leaving its monetary policy unchanged while signaling its concerns regarding international developments.

"Janet Jellen's economic projections and comments indicate that most governors are expecting a rate hike before the end of the year and the months of October and December are the options." says BNP.

As the USD's positioning is very flat and US short rates indicate only a small chance of seeing the rates risen before the end of the year, we believe that there is little room for a defeat of the dollar over the next months.

Volatility in global markets continues and deflationary forces could well prompt the Fed to not budge in Q4. And these same factors could prompt other central banks to ease monetary policy. The ECB and the BOC are on the frontline."

BNP remains bullish on the USD/CAD and USD/JPY.