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USD extends its FOMC-induced correction – Danske Bank

FXStreet (Edinburgh) - Chief Analyst Allan von Mehren at Danske Bank assesses the USD decline as of late, mainly in response to the dovish tone by the FOMC minutes on Wednesday.

Key Quotes

“The USD has weakened broadly in recent days”.

“The drivers have been 1) the Fed’s new Labour Market Conditions Index (LMCI), which was weaker than expected, and 2) positioning with IMM data for the week ending 30 September showing that speculators are most bullish on the USD since May 2013”.

“The minutes from the September Fed meeting have further fuelled the USD correction”.

“Specifically, the comment that ‘some participants expressed concern that the persistent shortfall of economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the US external sector’ is important”.

“Near term, expect the USD correction to continue as the market digests the Fed minutes and long USD positioning is reduced”.

France Exports, EUR fell from previous €36.2B to €35.63B in August

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