Falling yuan could drag Asian and commodity currencies weaker and keep dollar in favor

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Dollar starts the week on a strong note

High U.S. Interest Rates + Poor Overseas Environment = Stronger Dollar

High U.S. bond yields and conditions in China’s financial sector also appeared to be deteriorating, weighing on risk assets.

Unless Chinese authorities can surprise with some strong stimulus, a weaker yuan could drag Asian and commodity currencies lower and keep the greenback in favor.

The US dollar index (DXY) is at risk of testing the 103.50/103.60 area this week.