Better US data will likely see short term interest rates move in the dollar’s favor, breaking the summer impasse with ZIRP currencies. Flows and positioning are also more favorable...This summer’s FX theme was divergence between the zero interest rate policy (ZIRP) currencies EUR, JPY, GBP and CHF, which have remained resilient against the dollar, and almost all other major FX. The former diligently followed short term rate differentials which have remained relatively bounded. The latter moved in line with longer term yields, which have shifted decisively in favor of the US. To maintain our bearish view on ZIRP vs. ... (full story)