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Swiss Franc: Highly valued or significantly overvalued?
The Federal Reserve cut the policy rate by 25 basis points yesterday, but disappointed some dovish expectations (and President Trump) by: (i) presenting a Dot Plot with no more rate cuts and (ii) not really addressing the squeeze in dollar liquidity this week. As James Knightley writes, a divided Fed underwhelmed, although we think it will have to cut again in December. The 2-10 year Treasury curve flattened 5bp, telling us that the Fed is following, and not ahead of, the global slowdown, which generally creates a backdrop for dollar stability/strength against pro-cyclical currencies. As we’ve discussed before, we ... (full story)