Currency Rally Sows Seeds of Own Demise in Fed Paradox
- Gains in emerging markets seen reliant on Fed procrastination
- Retreat in volatility fosters conditions for higher U.S. rates
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This month’s in higher-yielding currencies is in danger of snuffing itself out.
The Australian dollar to the South African rand have strengthened in the past three weeks after the Federal Reserve held off raising interest rates in September, citing global market turmoil. The decision preserved their yield advantage over the U.S., fueling the currencies’ recoveries from this year’s lows.