This month’s mixed dollar performance has added doubts about the dollar trend. Indeed, FX analysts have revised up their year-end forecasts for both the euro and aussie against the dollar compared to the start of the year (consensus from 1.27 to 1.28 and 1.01 to 1.03 respectively). However, we maintain a firmly bullish dollar view based on three factors: the shift in correlation between risk and the dollar, US growth and stock outperformance versus the rest of the world and a trough in US real yields.
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Deutsche Bank