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U.S. Dollar’s Comeback May Cut Short Rally in Emerging Currencies

  • Domestic risks are set to hit EMFX, Wells Fargo’s McKenna says
  • Dollar will gain the most versus emerging peers, he says
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Has the Buck Stopped Here?
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A rebound in the world’s reserve currency could choke the current rally of its peers in emerging markets.

That’s the view of Brendan McKenna, a Wells Fargo Securities strategist who expects investors to flock to the U.S. dollar just as underlying risks in developing economies come into focus. The firm was among the most accurate forecasters of major currencies in the fourth quarter -- and No. 1 for Latin America.