Currency players forced to pare US$ forecasts
Market turmoil and central banks' actions reverse currency rally
New York
CURRENCY forecasters are getting steamrolled by the US$5.3 trillion a day market as traders all but abandon bets that monetary policy divergence between the world's major central banks will fuel a third year of US dollar gains.
Strategists have been left in a lurch as the most popular trading recommendation of 2016 implodes. The chances of the greenback strengthening beyond median year-end forecasts of US$1.06 per euro and 123 yen have fallen to less than 22 per cent, from 41 per cent on Dec 1, options prices imply. Global financial market turmoil, and the reaction of central banks, are forcing forecasters to tear up predictions for US dollar strength 40 days into the new year.
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