September Op-Ed: Dollar reigns supreme
- The Fed needs to see a softening of the labour market and will hike until it sees one.
- The Fed’s hawkishness has some contagion effects on Europe, but the ECB is finding more and more reasons to underpin its own “big” and “fast” hikes.
- US$ strength reflects the better position of US economy, cyclically and structurally.
- Vicious circle of inflation, rate hikes and weaker currencies threaten Europe.
- Cheap UK and European equity markets may eventually contribute to new inflows.