We have revised our expectation of a large rebound in the value of the dollar. Although we still think some appreciation against the other “majors” is likely by the end of next year, we now forecast that the US currency will only rise to $1.30 against the euro (vs. to parity previously), to $1.55 against sterling (vs. to $1.40), and to 90 yen (vs. to 100). We have also tempered our expectation of dollar appreciation during the remainder of 2011. We now expect the dollar/euro and dollar/sterling exchange rates to end this year broadly where they are now and the dollar to rise to just 85 yen.
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