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Marc Chandler

Marc Chandler

He has been covering the global capital markets in one fashion or another for more than 30 years, working at economic consulting firms and global investment banks. After 14 years as the global head of currency strategy for Brown Brothers Harriman, Chandler joined Bannockburn Global Forex, as a managing partner and chief markets strategist as of October 1, 2018.

Articles by Marc Chandler

China’s CSI 300 Rises for Seventh Consecutive Session and Offshore Yuan Strengthens for the Sixth Session

10 days ago

Overview: The dollar is trading quietly
after being sold yesterday. It is still soft against the dollar bloc and the
Swiss franc but is firmer against the other G10 currencies. Narrow ranges have
dominated. Emerging market currencies are mixed, with central European
currencies and the Taiwan dollar trading softer. The offshore Chinese yuan is
firmer for the sixth consecutive session. The highlights of today’s North
American session features minutes from last month’s FOMC meeting, a $16 bln
sale of 20-year Treasuries, and Nvidia’s earnings. Most large
equity markets in the Asia Pacific region fell but Hong Kong and China. The CSI
300 rallied four consecutive sessions before the Lunar New Year holiday and is
up in each of the three sessions since returning.

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Dollar Slips but Dip may Offer New Opportunity

11 days ago

Overview: The US dollar is offered today. It is
trading softer against all the G10 currencies, with the yen the notable
exception, and it is flat. The Antipodean are leading the way, taking out last
week’s highs, as has the euro. That said, the intraday momentum indicators are
stretched as NY dealers return from the long holiday weekend. The Scandis are
also trading above last week’s highs. The yen, sterling, Canadian dollar, and
Swiss franc are still inside last week’s ranges. Most emerging market
currencies are trading with a firmer bias today, as well, led by central
European currencies. The Chinese yuan is also slightly firmer after banks cut
the five-year loan prime rate by 25 bp. A handful of Asian currencies are
softer, including the Thai baht following

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China Returns, the US is on Holiday, and the Dollar Consolidates

12 days ago

Overview: US markets are closed for President’s Day,
while China’s markets re-opened from the long Lunar New Year holiday. Mainland
stocks advanced, while the yuan slipped slightly. The US dollar is mostly
softer but in narrow ranges. The Antipodeans and yen lead, while the Swiss
franc the only G10 currency that is slightly softer. Most emerging market
currencies are lower, led by about a 0.5% loss of the South African rand. The
Mexican peso’s and South Korean won’s small gains are the exceptions. Stocks in the Asia Pacific
region were generally higher, led by China, but foreign inflows lifted South
Korea’s Kospi by 1.2%. Japan’s markets were mixed. Europe’s Stoxx 600 is
treading water. It advanced 1.4% last week, its fourth consecutive weekly gain.
US index

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Week Ahead: China Returns and Flash PMI Featured after US Rate Adjustment was Extended

14 days ago

The US January CPI and PPI came in stronger than expected and this extended the recovery in US interest rates. In turn that helped underpin the dollar. We do not think the data itself changes the Fed’s stance. At least seven Fed officials speaking in the coming days will test this hypothesis. There are still several key reports before the data dependent FOMC meets again in about four weeks. Owing to the different weights and methodology, the PCE deflator, which the Fed targets, is likely to be better behaved. Still, the two-year Treasury yield popped above 4.70% at the end of last week, a new three-month high. The dollar has risen against most of the major currencies for six of the seven weeks to start the year. There are a couple of exceptions to note. The yen

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Quiet End to a Busy Week

15 days ago

Overview:  The US dollar is winding down this week on
a quiet note. Most of the G10 currencies are trading within yesterday’s ranges.
On the week, only the Scandis are set to close with gains, though with a little
effort, the Australian dollar could too. The Japanese yen and Swiss franc are
the laggards off 0.65%-0.75% this week. Most emerging market currencies outside of
central Europe are firmer. The South African rand is the strongest this week,
followed by four Latam currencies (though not the Brazilian real ~-0.4%, in its
Carnival-holiday shortened week). The Nikkei drew closer to its record high
with modest gain that brought this week’s advance to 4.4%. Mainland shares that
trade in HK rose 2.7% today amid reports of heavy travel during the Lunar New
Year

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Divergence Highlighted by Back-to-Back Quarterly Contractions in Japan and the UK but Little FX Reaction

16 days ago

Overview: There has been a string of disappointing economic news today. Japan’s economy surprisingly contracted in Q4 23 and the Q3 contraction was a little deeper than initially estimates. Australia’s jobs growth was weaker than expected and unemployment rose to 4.1%, matching the highest since November 2021. The UK’s economy contracted more than expected in Q4 23, its second consecutive quarter without growth. That seems like poor news ahead of today’s two byelections. The reaction in the foreign exchange market is just as surprising as the data. The yen strengthened, and the dollar briefly traded below JPY150. The Australian dollar dipped but recovered. On the other hand, sterling is languishing and is the only G10 currency that is trading lower today in the

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Japanese Officials Weigh-In and Help Yen Stabilize, while Euro and Sterling Extend Losses

17 days ago

Overview: The market’s reaction to the firmer than expected
January CPI seems exaggerated. We do not think it was the game-changer for the
Federal Reserve that the market seemed to think. The dollar was driven higher,
and it is stabilizing today, though the euro and sterling extended their
losses, most of the other G10 currencies did not. After the yen’s six-week
slide did not elicit a response from Japanese officials, yesterday’s drop did,
and this may have helped steady the exchange rate today. However, the dollar’s
advance against the yen does not seem over. Emerging market currencies are
mostly heavier. The Mexican peso, which was the worst performer yesterday is
the best today with a minor gain of about 0.20%. After the sharp US
equity losses yesterday, Asia

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Sterling Buoyed by Labor Market Report Ahead of US CPI

18 days ago

Overview: The US dollar is enjoying a mostly firmer bias ahead
of today’s CPI report. Sterling is the strongest among the G10 currencies after
a more resilient than expected labor market report. The dollar extended its
gains against the Japanese yen to a new high since last November, but the
market seems cautious as it approaches JPY150, where large options expire today.
On the other hand, emerging market currencies are mostly faring better. The
Mexican peso and Polish zloty of notable exceptions and are nursing minor
losses. The Nikkei set new 30-year+ highs and at one point rose 3% today, the most
since November 2022 before settling up nearly 2.9%. It is about 2.5% away from a record
high. Most markets in the Asia Pacific region rose today, though Australia

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The Greenback is in Narrow Ranges to Start the Week

19 days ago

Overview: The foreign exchange market is quiet. The
Lunar New Year holiday shut most Asian markets. That, coupled with the light
news in Europe, have served to keep the dollar in narrow ranges against the G10
currencies. The Swedish krona, Norwegian krone, and Japanese yen are posting
minor gains against the greenback. The New Zealand dollar, which was strongest
major currency last week (1.4%) is off by almost 0.5% today, making it the
weakest today. RBNZ Governor Orr underscored the recent message that inflation
is still too high (~4.7%). Emerging market currencies are narrowly mixed
(+/-0.2%). Of note, India reports December industrial production and January
CPI shortly.The few equity markets in the
Asia Pacific region that were not on holiday today, including

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Week Ahead: Will Soft US CPI and Retail Sales Mark the End of the Interest Rate Adjustment and Help Cap the Greenback?

21 days ago

The
markets are still correcting from the overshoot on rates and the dollar that
took place in late 2023. The first Fed rate cut has been pushed out of March
and odds of a May move have been pared to the lowest since last November. The
extent of this year’s cuts has been chopped to about 4.5 quarter-point move
(~112 bp) from more than six a month ago. The market has reduced the extent
of ECB cuts to about 114 bp (from 160 bp at the end of January and 190 in late
2023). The Bank of England is now expected to cut rates three times this year
(75 bp), which is nearly 100 bp less than was discounted at the end of last year. The extent
of Bank of Canada rate cuts this year has been halved to less than 80 bp from
160 bp in late December 2023. We suspect that the

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Greenback Surges as Rates Back Up

January 16, 2024

Overview: The US dollar is bid across the board and posting its best session of the month. It is up between about 0.5% (Canadian dollar) to almost 1.0% (Australian dollar) among the G10 currencies. Among the emerging market currencies, only the Russian ruble is holding its own. Approaching CNY7.20, the greenback is near two-month highs against the yuan. The dollar has been bolstered by rising US rates. The US two-year yield is up six basis points to near 4.20%, having bottomed at the end of last week around 4.11%. The US 10-year yield is up about the same amount to poke above 4.0%. European yields are as much as two basis points lower.

Equities are broadly lower. Only China’s CSI managed to rise today (~0.6%) in Asia Pacific among the large bourses. Europe’s

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Week Ahead: Real Economy

January 13, 2024

Given the world’s turmoil, including the escalation, and
broadening of the conflict in the Middle East and China’s continued aerial
harassment of Taiwan ahead of the election, the capital and commodity markets
have remained firm. February WTI fell about 1.7% last week and March Brent
slipped around 0.65%. Shipping costs are rising as the Rea Sea is avoided
and supply chain disruptions are threatened. Still the MSCI index of developed
equity market rose by nearly 1.8% last week after posting snapping a nine-week
advance the previous week. The MSCI emerging market equity index is off about
3% to start the year. China alone accounts for about half of the losses. Neither the
slightly firmer than expected US December CPI, that included a 0.4% rise in the
core measure

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China Data Dump Keeps Market Looking for a Rate Cut Next Week

January 12, 2024

Overview:  The mostly consolidative week for the US dollar
continues. Most for the G10 currencies are +/- about 0.25% today and only a
slightly wider range for the week. The odds of a Fed rate cut in March is
virtually unchanged on the week at around 75%. The JP Morgan Emerging Market
Currency Index is practically flat on the day and week. The Russian ruble and
Mexican peso lead today’s advancers, while eastern and central European
currencies are laggards. The Chinese yuan is flat despite moderating deflation
and a larger trade surplus. Lending figures disappointed. The PBOC is likely to
cut its one-year benchmark rate at the start of next week. The US and UK strike on the Houthi in Yemen has helped lift oil and gold
prices, but otherwise the impact on the

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Can the US CPI Break the Dollar out of its Consolidation?

January 11, 2024

Overview: Stocks and bonds are
trading higher, and the dollar is narrowly mixed ahead of the December US CPI
report. Most of the large bourses in Asia Pacific advanced, led by Japan to new
30-year-plus highs. Hong Kong’s Hang Seng snapped seven-day slide to post its
first gain of 2024. Europe’s Stoxx 600 is up about 0.33%, to recoup most of its
losses in the past two sessions. US index futures enjoy a modest upside bias.
Benchmark 10-year yields in Europe are off 3-6 bp, with the peripheral premiums
narrowing slightly. The 10-year US Treasury yield is off four basis points to
slightly below 3.99%. The yield has remained in the range set after last
Friday’s jobs report and soft ISM services (~3.95%-4.10%). The futures market
has about a 70% chance of that the

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Don’t be Burned in the Churn

January 10, 2024

Overview: The broad consolidation in the dollar after the
gyrations at the end of last week continues, and within it the greenback is a
bit softer today. Among the G10 currencies, only the yen is failing to post
gains. Most emerging market currencies, led by central Europe, are also firmer
today. A notable exception is a handful of Asian currencies, include the South
Korean won, Taiwanese dollar, and the Philippine peso. The market’s focus is on
tomorrow’s US CPI. Meanwhile, the US 10-year yield is lower for the third
consecutive session and is below the 4% threshold ahead of today’s Treasury
auction. European benchmark 10-year yields are also 2-4 bp lower. Despite a
weak reception to its 10-year bond sales, the disappointing wage growth in
Japan helped restrain

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The Dollar Goes Nowhere Quickly

January 9, 2024

Overview: The dollar continues to consolidate
broadly after the dramatic price swings at the end of last week. For the most
part, the greenback remains inside yesterday’s ranges, which were inside last
Friday’s. The G10 currencies are a little heavier today, except the Japanese
yen and Norwegian krone, which are posting small gains. Indeed, the greenback is near session highs against most of the major currencies as we go to print. Emerging market
currencies are more mixed. Central European currencies and the Philippine peso
are modestly lower, while the South African rand and Mexican peso join the Thai
baht and Malaysian ringgit to advance. Gold is recovering from yesterday’s
slide to about $2017, the lowest level since December 18. It is approaching

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Consolidation Featured

January 8, 2024

Overview: After dramatic intraday price swings after
the US jobs data and service ISM figures before the weekend, the dollar is
consolidating today in mostly narrow ranges. The prospect for a March cut by
the Federal Reserve finished last Friday virtually unchanged (73% vs 70%) and
is about 66% chance today. There was interest in Dallas Fed’s Logan’s
suggestion that the tapering of QT be discussed, though it seems to simply
confirm what many has suspected as the use of the reverse repo facility
diminishes. We suggested it
could wind down by the middle of the year. Also, over the weekend, a tentative
deal to re-authorize the federal government spending to avoid a partial
government shutdown beginning January 19 was struck but it is not clear that
the congressional

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Week Ahead: Attention Turns Back to Inflation

January 6, 2024

The terribly mixed US jobs report spurred
dramatic intraday swings in exchange and US interest rates. But at the close,
the dollar was little changed against most major currencies, and expectations
for Fed policy was nearly unchanged. The futures market has about a 70% chance
of a cut at the March meeting. The Dollar Index was off by less than 0.1%. Job
growth held up better than expected in December, the unemployment rate held
steady, and average wages rose slightly more than expected. However, there were
again downward revisions to past job growth (-71k), the participation rate fell
to 62.5% (from 62.8%), and the work week slipped (34.3 hours from 34.4 hours).
There is little doubt that the labor market is slowing. Job growth in Q4 23
averaged 165k, the lowest

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Greenback is Bid ahead of the Jobs Report

January 5, 2024

Overview: The dollar is bid going into the December
jobs report. After selling off into the end of last year, it has recovered this
week. The five-day moving average is crossing the 20-day moving average against
several of the currency pairs, capturing the shift in momentum. The greenback’s
gains have as interest rates have jumped. The 10-year Treasury yield finished
last year near 3.88% and is now near 4.04%. European benchmark rates have
mostly risen 15-20 bp this week, though the 10-year Gilt yield is up almost 28
bp. The market has downgraded the odds of a March cut by the Federal Reserve to
around 68% from 100% at the end of 2023. Stocks have been hit by profit-taking to
start this year. China’s CSI 300 and Hang Seng have fallen every day this week
for about

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Consolidative Tone Emerges Ahead of Tomorrow’s US Jobs and EMU CPI

January 4, 2024

Overview: After gaining for the past couple of
sessions to open the New Year, the dollar is mostly softer today. The yen is
the main exception. The greenback was bid above the JPY144 area where
chunky options expire today. Most emerging market currencies are also firmer
though there are a few exceptions in Asia, like the South Korean won and Thai
baht. Still, the general tone is consolidative ahead of tomorrow US jobs data
and the eurozone’s CPI. Equities, which began the year on profit-taking, are
stabilizing today, though it was not so apparent in Asia Pacific, were most of
the large bourses fell, led by China’s CSI 300 (~-0.95%). Europe’s Stoxx 600 is
up about 0.35% after falling nearly 1% in the past two sessions. US index
futures are posting minor gains. The

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Holiday Moves Continue to be Unwound

January 3, 2024

Overview: The dollar is firm. Rates are mostly
higher and equities lower. The moves scored in the holiday-thin markets are at
end of last year are being unwound. This does not appear complete yet. Geopolitical tensions remain high but do
not seem to be having a direct market influence as both gold and oil are
trading lower. Among the G10 currencies, sterling has been the most resilient
today but nearly flat. Within the emerging market complex, the Hungarian forint
and Philippine peso are bucking the trend that has seen most of the emerging
market currencies ease. Gold is down for the fourth consecutive session, which
if sustained, would be the longest losing streak in more than two months. February
WTI’s dramatic downside reversal yesterday (from nearly $73.65 to

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Firm Start for the Greenback

January 2, 2024

Overview: The US dollar begins the new year on a
firm note. It is recovering against nearly all the G10 and emerging market
currencies today after depreciating in the holiday-thin markets over the past
couple of weeks. Japanese markets are on holiday until Thursday. The yen and
Swiss franc are the poorest performers among the G10 currencies. Among emerging
market currencies, the Mexican peso, Hungarian forint, and South African rand
are bucking the trend to post minor gains against the greenback. The Chinese
yuan is off by about 0.5% for its biggest loss in at least six months. Equities are mixed while bonds
have sold off. In Asia Pacific, Hong Kong and mainland Chinese equities tumbled
by 1.3%-1.5% to lead the regional decline, but Korea and Australia, and a

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January 2024 Monthly

December 30, 2023

The
only thing that can be said with high confidence about the year ahead is that it
will be different from 2023. Three broad forces will shape the business and
investment climate in the year ahead.First, the post-Covid
tightening cycle in the high-income countries, leaving aside Japan, has ended.
The question is when and how fast rate cuts will be delivered. Moderating price
pressures and weaker growth impulses have seen the pendulum of market sentiment
swing dramatically from the "higher for longer" mantra of most of
last year to pricing in aggressive easing the Federal Reserve and European
Central Bank. Several central banks from emerging markets, especially in Latam
and central Europe, have already begun cutting rates.The Federal Reserve’s
balance sheet

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Fed to Express More Confidence that Policy is Sufficiently Restrictive Despite the Easing of Financial Conditions

December 13, 2023

Commentary will resume with a 2024 outlook on December 29. Overview: The dollar is trading with a firmer bias today ahead of the outcome of the FOMC meeting. Standing pat for two
meetings was framed as a pause, but given the decline in price pressures, being
unchanged for a third meeting is understood as the end of the historically
aggressive tightening cycle. Fed Chair Powell is expected to express greater confidence
that policy is sufficiently restrictive to bring inflation back to target. Trading
after the FOMC meetings has been treacherous, with the markets often reversing
initial moves. The rally in the S&P 500 to
its best level since April 2022 failed to boost Asia Pacific equities today. Among
the large markets, Japan, Australia, and Taiwan did manage to

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Soft US CPI Today Paves Way for Fed Pivot Tomorrow

December 12, 2023

Overview: The US dollar is trading softer against all the
G10 currencies ahead of what is expected to be a soft November CPI report,
which paves the way for a pivot by the FOMC tomorrow. It is expected to signal
that policy may be sufficiently restrictive and anticipate being able to cut
rates next year more than it thought in September, even if not as much as is
priced into the market. Among emerging market currencies, central European
currencies are leading the way higher on the back of the euro that has moved
above $1.08 in the European morning. The softer dollar and lower interest rates
are helping gold stabilize after falling to almost $1975 yesterday (peak last
week was a record ~$2135). European benchmark 10-year bond yields are
mostly 4-6 bp lower. A

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BOJ Speculation Unwound, Taking the Yen Lower

December 11, 2023

Overview: The busy week of central bank meetings is
off to a mostly slow start. The dollar is narrowly mixed in quiet turnover,
except against the Japanese yen. Many participants seemed to exaggerate the
risks of a BOJ move next week and dollar continued its recovery that began
ahead of the weekend. Among emerging market currencies, central European
currencies appear to be aided by the firmer euro. They are resisting the
dollar’s advance seen against most other emerging market currencies, including
the Chinese yuan, which is near three-week lows. Gold, too, is unwinding last
week’s gains and near $1992 is near a two-week low. It reached a record high
slightly above $2135.50 last week. Nearly all the large equity markets in the
Asia Pacific area advanced earlier

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Markets Catch Collective Breath

December 6, 2023

Overview: The US dollar is mixed today. The dollar-bloc currencies are firmer, while the euro and yen are softer. We had anticipated a recovery of the dollar on ideas that the market has too aggressively pushed down US rates, and pricing in more Fed easing with higher confidence than seems to be warranted by the recent data.  However, US rates have not recovered, but the dollar has.  Partly, this reflects that rates have fallen as faster if not faster elsewhere, and especially in the eurozone after last week’s preliminary CPI.  Among emerging market currencies today, the Mexican peso’s 0.20% gain is leading a few currencies higher, but most have a softer tone. Equities are firmer across the board.  Nearly all the markets in the Asia Pacific region were higher,

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Softer Tokyo CPI Buys BOJ Time while Moody’s Cuts the Outlook for China’s Debt following Fiscal Stimulus and the Continued Property Slump

December 5, 2023

Overview: Outside of the Australian dollar, which
has fallen by around 0.6% following the RBA meeting and the softer final PMI,
which may have dragged the New Zealand dollar a lower by around 0.25%, the
other G10 currencies trading little changed ahead of the start of the North
American session. The eurozone and UK final PMIs were revised higher. Central
European currencies lead the emerging market currencies. China reported better
than expected Caixin PMI and Moody’s cut China’s sovereign outlook to negative
from stable. The yuan is little changed. Gold is quieter after
yesterday’s wild day that saw $115 range (~$2020-$2135). It is in around a $18
dollar range today centered near $2032. January WTI is largely steady. It has
fallen by about 6.2% in the past three

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Rates and the Dollar Come Back Firmer

December 4, 2023

Overview: Weekend accounts seemed to try to
understand what Fed Chair Powell said by beginning with the large drop in US rates. Yet,
most accounts miss the fact that no matter what Powell has said, the market has more often than not reacted as if he were a dove. Rates have come back firmer today, perhaps as some
recognized the overshoot. The US two-year yield is up nearly seven basis points after
falling 14 before the weekend. The 10-year yield is almost six basis points
higher around 4.25%. The dollar’s losses were initially extended but it has
recovered. Ahead of the start of the North American session, the greenback is
firmer against all the G10 currencies, except the Japanese yen. Most of the
freely accessible emerging market currencies, are also softer. Gold

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December 2023 Monthly

December 2, 2023

As the
year winds down, the global economy appears to be entering a new phase. While
North American and European central bankers swear that they are prepared to
respond to new threats to price stability, the markets demur. Indicative pricing in the derivatives
markets reflects the general conclusion that the central banks have most likely
completed the post-Covid monetary tightening cycle. Central bankers are pushing
against a premature easing of financial conditions. Last year’s sporadically large jumps in
monthly CPI measures have dropped out of the 12-month comparisons. Still,
inflation remains above targets but has slowed considerably. Japan remains the
notable exception. The Bank of Japan continues to inch its
way toward the exit of its extraordinary

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