G10 FX Outlook 2022: Mid-Cycle Dollar Strength

Nov. 19, 2021 5:48 AM ETFXA, CROC, FXC, EROTF, ULE, EUO, EUFX, FXY, JYNFF, YCL, YCS, FXF, FXB, GBBEF, UUP, USDU, UDN
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Summary

  • Pandemics and financial crises aside, exchange rates typically can be seen as an extension of monetary policy.
  • The Fed and the Bank of Canada should be at the front of the queue when it comes to tightening.
  • In 2022, it seems clear that the Fed will have the strongest cause to apply some monetary restraint and that the dollar should perform well.

American dollar currency symbol

Daniel Grizelj/DigitalVision via Getty Images

By Chris Turner, Global Head of Markets and Regional Head of Research for UK & CEE & Francesco Pesole, FX Strategist

Output gaps have closed/are closing

If equity markets embody some sense of confidence in

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