Shanghai Discord likely to weaken the euro again

Fed Chair Janet Yellen’s speech later today will, of course, be keenly watched for hints on the outlook for US interest rates. However, there have already been signs that the markets are reassessing their initially (very) dovish interpretation of the FOMC’s statements on 16^th March. We think that this process has further to run, putting renewed upward pressure on Treasury yields and the dollar. Speculation of a tacit deal to weaken the US currency at the Shanghai G20 also continues to fade.