The US Core PCE confirmed reading for July-September, released last Thursday, was 2.0%, down from the previous 2.3%.

This means that the Fed’s 2.0% inflation target has been reached. This has given the Fed room to cut interest rates. A lower dollar is likely to be the main theme in the currency markets over the next year.

Against which currencies to hold dollar shorts? Europe and the UK are not seen as fundamentally strong. The fundamentals of Europe and the UK are not that strong, so by process of elimination, it will be the yen The European Union and the UK do not seem to be that strong fundamentally, so by process of elimination it will be the yen or the Australian dollar.

From Christmas to the end of the year, The dollar is likely to weaken against the yen and the Australian dollar.