Even though the US economic situation is less appealing today than it was a year or even six months ago, the US appears to be in a stronger position in the short run than most other developed and emerging markets. Given recent job numbers and what appears to be a loss of business confidence as a result of the US-China trade conflict, the Fed is expected to stay accommodative, cutting its key interest rate again this September. It also appears plausible that the US will be willing to loosen monetary policy at a time when other central banks around the world, in both developed and emerging markets, are doing so. According to the Bank for International Settlements, central banks around the world have slashed interest rates 32 times this year to offset what appears to be weakening economic growth as the US-China trade war goes on; futures market pricing implies that many more rate cuts are on the way.
Meanwhile, Europe is still struggling with Brexit, while the Argentine financial crisis and the US-China trade war are having an impact on Latin America and Asia, respectively. As a result, even if US interest rates fall more, the US currency will likely keep its strength.
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