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USD beginning to stabilize in the near-term - BTMU

FXStreet (Łódź) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ observes that the US dollar has started to rise again after the slight downward correction at the beginning of the month.

Key Quotes

"The US dollar has strengthened modestly in the Asian trading session extending gains recorded so far this week. The US dollar is beginning to stabilize in the near-term after correcting modestly lower during the first half of October."

"The dollar index has found good support at around the 85.00-level. Building expectations of further monetary easing from the ECB and more evidence of slowing economic growth overseas have helped to provide support for the US dollar dampening the negative impact from the more dovish outlook for Fed monetary policy."

"At the margin the release yesterday of the stronger than expected US CPI report for September has also provided some support for the US dollar in the near-term. The report revealed that inflation pressures in the US remained stable which helped ease some concerns ahead of the report that inflation could surprise to the downside."

"The annual rate of headline and core inflation both held at 1.7% respectively in September. However, the report prompted little reaction in the US fixed income market which remains comfortable that the Fed will not begin to raise rates until late in 2015."

"We still expect the Fed to bring an end to QE at next week’s FOMC meeting but also continue to provide a relatively dovish outlook for monetary policy. The statement could signal greater concern over slowing global growth while maintaining the Fed’s commitment to leave rates low for a “considerable time” after QE has ended. In these circumstances, the US dollar may continue to struggle to regain upward momentum in the near-term although downside risks remain limited."

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