In today’s briefing:
- Global Fallout from Strong Dollar Spreads, but the Fed Does Not Care
Global Fallout from Strong Dollar Spreads, but the Fed Does Not Care
- Strong safe-haven demand for dollars is contributing to currency strength, as well as the Fed’s domestically-focused policy stance. Previous dollar bull markets have enjoyed considerable longevity, thereby suggesting further appreciation.
- Further interest rate increases by the Fed will accelerate capital outflows from the Asia Pacific region. While large-scale devaluations are unlikely, Asian corporations with dollar-denominated debt face higher financial stress.
- High imported energy and food prices have boosted European inflation. The weak euro has tightened European financial conditions due to the rise in dollar-denominated liabilities at banks and corporations.
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