Tuesday, December 29, 2009

Barclays: Central Banks Will End Dollar Rally

The dollar’s recent rebound will peter out by mid-2010, as foreign central banks diversify to other currencies and the Federal Reserve reverses stimulus slowly, according to Barclays bank.

The Fed will raise interest rates at a slower pace than the market expects, Barclays analysts say.

“We see the dollar strengthening in the first six to nine months of 2010 when the focus is on liquidity withdrawal and tightening of rates,” Steven Englander, chief U.S. currency strategist for Barclays, told Bloomberg.

“Once the market gets past this initial fear of tightening, the reality will be that the Fed isn’t going to be tightening very fast, and we’ll see dollar selling again.” (more)

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