Scotiabank note that "the USD has weakened...>

DOLLAR: Scotiabank note that "the USD has weakened broadly over the past several

sessions and losses are extending in response to President Trump's latest

comments on the Fed and his complaints about EU/China currency manipulation.

While short-term Fed tightening expectations have remained largely unchanged, US

Treasury yields have responded and softened to levels last seen in

mid/early-July, eroding the fundamental underpinnings that have driven the bulk

of the USD rally since mid-April. The USD's most recent upswing was not

supported by movements in interest rate differentials and driven primarily by

safe haven flows and positioning adjustments sparked by the panic in Turkey. A

continued unwinding of the panic trade should maintain pressure on the USD into

Friday's Jackson Hole speech from Fed Chairman Powell. Powell is not expected to

explicitly acknowledge President Trump's complaints but comments on flexibility

- as Powell moves to a higher-frequency policy meeting press conference schedule

in 2019 - will likely compound the USD's bearish turn as market participants

price in the risk of a more discretionary tightening path."