CPT Markets Market Analysis: Foreign exchange warning that the US dollar will not reach its peak in the world, and the risks are coming?
Don’t know what you think about the US rate hike? Do you think Powell can strike a balance between sustained economic growth and a stable decline in inflation?
According to outside rumors, many people are speculating whether Fed Chairman Powell will be determined to follow the fierce interest rate hike of former Chairman Volcker (Paul Volcker) to fight tenacious inflation. If this is true, then the dollar index may continue to hit a new high.
Carefully paying attention to the several steps taken by Powell, but in fact, he could have discovered his determination to move towards Vokel's strategy. Recently, Powell has publicly admitted that the economy may experience a period of pain in the short term, just to let inflation fall back to the target area. It is undeniable that this is a price that must be paid.
The king of the US dollar will likely wake up from his nap! The safe-haven capital flow caused by global economic weakness, coupled with the resilience of the US economy, paving the way for the Fed's interest rate hike strategy, so if the US dollar continues to hit a new high in the future, it will actually be expected.
As we all know, exchange rate is a relative price, so the main reason why the US dollar is so strong is that the currencies of other major economies are too weak, whether it is the euro, pound, or even the Japanese yen. Although European countries have not yet made proper and complete plans for natural gas distribution, many countries have recently announced different measures. In terms of the current situation, it is still impossible to effectively minimize the damage caused by energy.
The European economy is much more sensitive to natural gas supply than the United States, so the European economy must have performed very poorly, and whether it is the European Central Bank or the Bank of England, between the surge in inflation and the weak economy, it will definitely be more difficult to choose than the United States Federal Reserve.
Are you curious about the surge in the US dollar and what kind of reaction will the US government make? According to past experience, the US dollar index usually soars by 20% within 12 months, and because of concerns that companies will lose competitiveness, the US government will accuse foreign countries of unfair behavior.
But why not now? Because the strength of the US dollar will help the United States fight tough inflation problems. At present, the United States is quite relieved about the strength of the US dollar, but have you ever thought that other countries will have an impact on the US economy?
When the US dollar is stronger and the longer it takes, the possibility of the world falling into long-term stagflation will continue to increase, and in the future, the debt of developing countries will become increasingly serious, and commodity trade will be restricted. For example, the demand for US products will continue to decrease, resulting in more unstable supply chains, which will affect the US economy.
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