USD: Further Gains Expected. Bullish. We increasingly believe the USD is moving back to its long-term bullish trend, driven by two factors. First, the closing US output gap and its implications on monetary policy should move rate and yield differentials in favour of the USD. Second, should global yield curves continue steepening as inflation picks up,volatility could rise and risk appetite could get hit, resulting in USD-supportive repatriation flows. We expect USD strength to be most pronounced against low-yielding currencies (low-yielding AxJ, JPY and SEK) while high yield EM currencies with good fundamental ... (full story)