USD declines show further signs of gaining traction. Fed's Bullard said US interest rates have already returned to neutral, with no further increases necessary to meet the inflation target. We believe the latest development suggests that current pace of Fed monetary policy normalisation remains appropriate and this should dispel fears that Fed may quicken its pace of normalisation. We reiterate that the current USD rally since mid-Apr is temporary. We look for USD gains since mid-Apr to reverse.
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