While the dollar eased back a little after today’s US non-farm payrolls report led to a reversal in US interest rate expectations, news that the Nordstream pipeline may not reopen as planned has seen it rebound. The greenback looks set to end the week stronger against most other major currencies. (See Chart 1.) While it may be due a period of consolidation after a strong run in recent weeks, we have revised up our forecast for the dollar against European currencies and now expect the EUR/USD and GBP/USD rates to reach 0.90 and 1.05 respectively next year as the economic slowdown and the terms of trade shock hitting the region take their toll.
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