<p>Deutsche Bank says on the ructions in the US financial system since Friday:</p><ul><li>We believe these will have long-lasting negative implications for the USD and our bearish conviction has been strengthened.</li></ul><p>In (very) brief):</p><ul><li>the Fed's new Bank Term Funding Program can be interpreted as re-establishing a temporary QE program by offering to absorb UST and MBS from banks at above-market prices<ul><li>This is in effect a self-regulating break to QT whereby if funding pressure becomes too acute as bond prices sell-off, liquidity gets reinjected into the system offsetting the reserve drain from QT.</li></ul></li><li>this tightening cycle will now be amplified due to stress in the US banking system. <ul><li>The immediate conclusion is that the bar for the Fed to reaccelerate tightening is significantly higher and the likely end-point of that tightening lower. We have been writing in recent weeks that "fear of 6%" is the single-biggest obstacle to our dollar bearish view and with this receding it is an important dollar negative catalyst. </li></ul></li><li>US wages continue to decelerate and as the defining arbiter of labour market tightness continue to signal improvement.<ul><li>wages are coming down despite strong employment growth because the supply side is finally responding.</li></ul></li><li>We stuck with our dollar bearish view last week but wrote that this week's US CPI report could have a critical bearing for our near-term views. Enough has happened since then that we no longer think CPI is as an important event from either a Fed pricing perspective or a broad read-across to inflation.</li></ul><ul><li>as things stand our preferred dollar shorts remain the EUR and JPY, with the recent addition of the CHF.</li></ul><p>Earlier:</p><ul><li><a href="https://ift.tt/CMJbeUR" target="_blank" rel="follow" data-article-link="true">Bank analysts hugely split on what to expect from the FOMC; from +50bp to -25bp forecast</a></li></ul> This article was written by Eamonn Sheridan at www.forexlive.com.

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