While the Federal Reserve left US interest rates unchanged last night, the market has recently started to expect that a rate hike will come sooner than initially anticipated, leading to expectations of a near-term rebound in the US dollar exchange rate. If memory serves me correctly, a similar shift in interest rate expectations in 2004 heralded the dollar rally in 2005. However, we are facing a totally different situation today than in 200405. In my view, the dollar may have entered a cyclical downtrend from a medium-term perspective and its weakness may last through 2010, if not longer.
Crucially, the dollar's expected depreciation may follow a rotational pattern instead of...
¬ Haymarket Media Limited. All rights reserved.
