Three key developments explain the US dollar’s slide against other major currencies since its peak on 20th January – higher commodity prices, increased appetite for safe havens and a scaling back of expectations for tighter Fed policy. Yet we still expect the US dollar to recover through the end of next year as commodity prices fail to surge, the demand for safe havens wanes and the federal funds rate is raised by more than investors assume. Only in 2018 do we expect to see the US currency flounder.
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