Dollar strength unlikely to alter outlooks for monetary policy

Being long of the dollar is reportedly one of the most crowded trades in the market. However, we stillthink that the US currency has further to climb against other majors. Indeed, we now expect the euro tofall below parity no later than the middle of next year. We also continue to forecast the yen to weakenas far as 140 versus the dollar by the end of 2016. Nonetheless, we do not expect additional dollarstrength to deter the Fed from raising US interest rates aggressively, or additional euro and yenweakness to eliminate the need for the ECB and Bank of Japan to loosen policy a lot further.