• The key theme in financial markets over the past month has been the changed perception about how long the Fed will continue to loosen policy settings.
• A logical flow-on effect if the Fed is about to begin tapering asset purchases is the recent lift in US long-term yields. In turn, higher US yields have supported a firmer USD
• One impact of an ongoing firming USD may be that central bank focus in Australia, New Zealand and Canada can become slightly simpler, as some implicit tightening from very strong local exchange rates will reduce as the USD firms.
Read the full report: Market Research
Commonwealth Bank