April 28, 2022 - 01:33 PM 268 views
The dollar is set to rise dramatically as a result of global
events. The dollar's boom in 2022 may well turn into a bust in 2023, but ING
economists aren't yet pronouncing a top in the currency.
2022, the dollar will be soaring, but in '23, it will be bust.
"The Federal Reserve appears to be on the verge of launching
an aggressive tightening cycle this year to combat inflation." While
Europe is dealing with its own growth problems and countries like China and
Japan are still in monetary easing mode, war in Europe and the risk of an
abrupt cut-off in Russian gas are hurting European growth prospects and local
currencies. Asia, on the other hand, is dealing with its own growth problems
and countries like China and Japan are still in monetary easing mode. This
atmosphere is unlikely to change in the next six months, implying that the
dollar's Bull Run will continue."
The strong dollar and robust domestic demand are sucking in
imports and expanding the trade deficit, which is the Achilles Heel of this
currency boom. One emerging narrative is that, similar to the 1980s, Fed
efforts to combat inflation will send the dollar skyrocketing, and the 2022
dollar boom will transform into the 2023 dollar bust if the Fed cuts rates by
the end of the year, as we expect. For the time being, the story will be
dominated by the dollar's rise."
"Closes over 104 DXY signal that the dollar rise is about to