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Pace of dollar appreciation expected to wane next year

At first glance, there would appear to be an inconsistency between our forecast that the trade-weighted dollar will increase by a modest 2% next year, while at the same time we also expect short-term interest rates to increase by about 75 basis points more than the markets do. But the dollar’s 15% rise over the past 15 months isn’t all down to interest rate differentials.

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