The USD has entered a period of retracement, weakening against most currencies in April (except the JPY), a trend which has been supported by relative central bank policy differentiation. However, once this phase of weakness completes we expect the USD to strengthen against the EUR, GBP and JPY into year-end on relative growth and central bank policy dynamics. The CAD, MXN, AUD and INR are expected to be somewhat range bound while the PEN, KRW, and NOK are expected to retrace lost ground. Further weakening in the JPY is also part of our base case as policy initiatives drive a sustained depreciation.
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Scotiabank