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Hard to see sustained US Dollar depreciation - RBS

FXStreet (Bali) - Greg Gibbs, FX Trading Strategist at RBS, notes that it is hard to see a sustained rally in most currencies against the USD.

Key Quotes

"The USD is under pressure as the Fed expresses its concern over its strength. However it is hard to see a sustained rally in most currencies against the USD."

"The fall in front end US yields appears largely driven by the strength of the USD, and thus the USD should not fall too far (else US yields should rise again)."

"The fundamental case for buying low yielding EUR and JPY remain very low as both should be preferred funding currencies to the extent that a risk rally resumes. Global risk factors remain high and equally it is hard to see a sustained rally in most EM and commodity currencies."

'Nevertheless we appear to have more clearly entered a period of consolidation and it may be appropriate to prepare for a more sustained period of correction in recent USD strength."

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