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USD strength shifts to EM and commodity currencies - RBS

FXStreet (Łódź) - The RBS team of analysts suggest that the dollar is expected to remain relatively strong but recent signs of a global growth slowdown are weighing on commodities and some EM currencies.

Key quotes

"USD strength still is apparent, but as the market loses confidence in the global growth outlook, led by concerns over growth in China and several other emerging countries, the losses are more noticeable in the last week in commodity and some EM currencies."

"EM equities and bond markets have underperformed major markets in recent weeks and commodity price falls have been more broad-based."

"The market is de-risking somewhat from EM markets and this is spilling over to currency performance."

"We may not move into a complete 'risk-off' environment; global policy easing should keep the market looking for higher yielding opportunities."

"However, now that we are likely to remain in a relatively strong USD environment and there are growth challenges in EM, it would not surprise to see further weakness in EM and commodity currencies."

"After its particularly rapid rise over the last month, we expect USD/JPY to consolidate. Japan PM Abe's comments today reflect internal and external pressure to stabilize the JPY."

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