Did The Fed Break The USD?

Posted by Seeking Alpha

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46662006 14582713928524 rId4

46662006 14582713928524 rId4Summary

– The Fed was much more dovish than the markets had expected, resulting in broad USD weakness.

– A weaker USD will help the US to more quickly close its output gap.

– Current USD weakness will reverse one of two ways.

– Either other central banks will ease in response to local FX strength, or strong US data will confirm the need for tighter US monetary policy.

– The commodity rally could very well run out of steam soon, given substantial producer hedging appetite and the possibility of a USD turnaround.

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