0504 GMT – According to Luca Bindelli, the head of investment strategy at Lombard Odier, the U.S. dollar is expected to weaken further against both major and emerging market currencies. He notes in a research report that previously extended short positions on the dollar have now normalized. The chances of the Federal Reserve reducing rates, while other major central banks (excluding the Bank of England) maintain stable policy rates, will lessen the yield advantage of the U.S. dollar against both major and emerging currencies. Additionally, anticipated economic resilience and equity outperformance in emerging markets may lead to increased investments in EM assets, thereby bolstering EM currencies, Bindelli adds. Lombard Odier forecasts the EUR/USD exchange rate to reach 1.22 in a year, while it currently stands at 1.17. (monica.gupta@wsj.com)

Dollar Likely to Consolidate, Not Collapse

0258 GMT — Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho Securities, states that the dollar is more likely to consolidate rather than collapse, as the markets have already factored in potential U.S. rate cuts. He mentions that upcoming U.S. data and the Fed's decision in September may only serve to “temper not tear down” the dollar. The threshold for a weak [nonfarm payrolls] figure or other U.S. data to negatively impact the USD is quite high. Furthermore, he points out that U.S. trade policies that redirect trade and capital flows from trading partners will likely delay, and possibly temporarily overwhelm, the pressures to 'Sell America.' The U.S. dollar index has risen by 0.1% to 97.83. (hoishan.chan@wsj.com)