With the dollar index at a 15-year low, bulls on the currency are a rare breed these days. Surprisingly bad jobs data and falling home sales suggest a broader malaise affecting the US economy. That, so the thinking goes, provides the Federal Reserve with the reason it needs to cut the Fed funds rate next week.
There is no doubt that the dollar could fall further in the short term. Fear that this might stoke inflation is not likely to be a decisive factor in the Fed's thinking. Weak economic growth is the concern now. As monetary policy eases, it is logical, and desirable, that the dollar follows in its wake, provided it is at an orderly pace - not least to help unwind some of the more glaring imbalances that have built up.
