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Dollar likely to stay strong as trade tensions continue

Until President Trump’s negative comments today, rising optimism about the US-China trade negotiations had seen risky assets rise and the renminbi/dollar fall back below the symbolic 7 level. Other emerging market currencies had also strengthened against the dollar, although the greenback had held up better against developed market currencies. The broader picture, however, is that the dollar remains near multi-year highs, and we expect it will strengthen further next year.

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