The US dollar gave back much of its gains from last week, as appetite for risk recovered and Chair Powell’s much-anticipated speech today provided some relatively dovish guidance on the path for Fed interest rate hikes. Nonetheless, we think that this will prove a temporary setback, and that the greenback will appreciate a bit further in final months of the year as the prospects for Fed policy normalisation improve and US bond yields rebound by more than those in other major economies.
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