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Weak US Dollar Meets Wobbling Euro in Battle of Funding Currencies
Weakness in both the dollar and euro is posing a dilemma for investors about which is the best source of funding for emerging-market carry trades. On balance, the U.S. currency is still the crowd favorite. The dollar has been sliding since the second quarter of 2020 as the Federal Reserve cut interest rates to a record low and spiraling coronavirus infections pummeled the U.S. economy. The euro has begun a swoon of its own in recent weeks, briefly dropping below the key $1.20 level, as delays in coronavirus vaccinations sets back expectations for a European economic recovery. “We continue to favor the dollar as our ... (full story)