Summary
– The Fed was much more dovish than the markets had expected, resulting in broad USD weakness.
– A weaker USD will help the US to more quickly close its output gap.
– Current USD weakness will reverse one of two ways.
– Either other central banks will ease in response to local FX strength, or strong US data will confirm the need for tighter US monetary policy.
– The commodity rally could very well run out of steam soon, given substantial producer hedging appetite and the possibility of a USD turnaround.
