It’s surprising not to see the USD trading weaker following yesterday’s relatively soft US CPI report (the breadth of inflation pick-up within the CPI basket was low and limited to a few components). Still, we attribute the currency’s resilience to the markets love for the dollar and a strong US economy narrative. But chasing this makes us nervous as there are plenty of warning signs to suggest that this love story could come to an abrupt end. The big risk that we see is the potential for over-exuberant short-term US GDP growth expectations to adjust lower as investors come to terms with the idea that the US economy ... (full story)