U.S. Dollar Stronger: Federal Reserve Versus Other Central Banks

Summary

• The value of the U.S. dollar continues to rise, not because of what the Federal Reserve is doing but because of what other major central banks are not doing.
• Finally, after a year of debating about whether or not the Federal Reserve should start to taper its monthly purchases of securities, bought outright, the Fed has begun to taper.
• The possibility that the Fed will raise its policy rate of interest in the near future has increased to the point that one can really believe it might happen.
• Other major central banks are still reluctant to back off from its policy easing, especially since the new strain of the Covid-19 virus is hitting certain areas quite hard.
• The value of the U.S. dollar will probably continue to rise in 2022.

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The value of the U.S. dollar is rising against other major currencies.

The reason seems to be that the Federal Reserve appears to be running a "less restrictive" ship than are other major central banks around the world.

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