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Conditions around the strong dollar… - BBH

FXStreet (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman noted the conditions that surround the FX space currently.

Key Quotes:

"The underlying theme in the foreign exchange market is the divergence between the US and UK on one hand and the euro area and Japan on the other. That divergence, however, may not explain the developments in the other capital markets."

"Many want to attribute this to the rise of the US dollar. This is deduced from economic theory."

"A rise in the dollar hurts exports, weighs on earnings of US companies, pressures commodity prices, most still priced in US dollars. All things being equal..."

"The euro peaked in May and sterling in July. The dollar bottomed against the yen early this year and broke out of its four-month two-yen range (~JPY101-JPY103) in late-August."

"The S&P peaked on September 19. It is true that currency appreciation is tantamount of some tightening of financial conditions. The real issue is how much the dollar has appreciated and how much-tightening financial conditions have taken place."

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