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Analysts at National Bank Financial suggests that their view that the USD is close to peaking assumes a drop in risk aversion.

Key Quotes

“We are counting on Washington recognizing the threat posed by de-globalization to world GDP growth and hence dialing back its protectionist measures. Moreover, if as we expect U.S. growth and inflation come short of the Fed’s forecasts next year, markets could reprice their expectations about monetary policy tightening in the U.S.”

“The accompanying depreciation of the greenback would be amplified by the reversal of massive net long positions on the USD.”