Brazil Central Bank Plans $2 Billion Dollar Auctions to Support FX Liquidity 
Fed Officials Split as Powell Weighs December Interest Rate Cut 
BOK Expected to Hold Rates at 2.50% as Housing and Currency Pressures Persist 
Indonesia Aims to Strengthen Rupiah as Central Bank Targets 16,400–16,500 Level 
BOJ Seen Moving Toward December Rate Hike as Yen Slides 
BOJ Governor Ueda Meets Key Ministers as Markets Eye Policy Shifts Under New Leadership 
Fed Rate Cut Odds Rise as December Decision Looks Increasingly Divided 
UK Raises Deposit Protection Limit to £120,000 to Strengthen Saver Confidence 
We have been arguing that normalization of monetary policies will be driving markets for years to come. We expect the Fed to lead the way. Other G10 central banks are likely to continue moving to the opposite direction for a while, and then start tightening after the Fed's tightening cycle has advanced.
Even if the Fed delays hiking rates, it will be the first central bank to do so, in our view. We believe that the ECB, at the other extreme, will have to ease policies further.
We expect the ECB to miss its inflation target in the months ahead and start talking about QE2, in the form of extending QE after September next year. The timing of the Fed rate hike and the ECB seriously considering QE2 will determine the EUR/USD path, but the final outcome is a weaker EUR/USD, in our view.
We like selling the EUR/USD rallies when we get them, as the path will continue being volatile. We also note that the Eurozone's unemployment rate is the highest in G10 compared with pre-crisis levels, and that the Eurozone also has the largest output gap. This suggests that EUR/USD could weaken more and remain weak in the medium term.
