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Talking Points:

• Interest rate expectations are one of the dominant fundamental themes for shaping FX markets

• Recently, there have been changes in Fed and ECB views, but the biggest shifts were for BoE and RBNZ

• With a heavy docket ahead, we could see some of these trends amplified or even reversed

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The Kiwi Dollar has hiked rates four times, and yet it is in retreat on rate forecasts. Meanwhile, the US Dollar is still on QE3, yet it has advanced versus most counterparts this past month. Monetary policy is a key element to pricing currencies, but far more important is the market's speculation over where these policies are heading that carries the the most weight. Recently, we have seen the greenback post a hearty advance without the yield response to back it. Will it continue? With hawkish expectations easing for New Zealand, the UK and Euro-area; will they continue to tumble or find equilibrium in price? We look at rate forecasts in the weekend Stratgy Video.

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