USD: Dollar to remain strong through the end of 2022 – Wells Fargo

Analysts at Wells Fargo continue to see further US dollar strength through the end of this year. They point out that despite a more aggressive pace of tightening from foreign central banks, they doubt international policymakers will be able to keep pace with the tightening cycle laid out by the Federal Reserve.

Key Quotes: 

“Despite a more aggressive pace of tightening from select international central banks, the Federal Reserve is still likely to lead the charge toward tighter monetary policy. In that sense, we continue to forecast a stronger U.S. dollar through the end of this year. That dollar strength should materialize as the Fed raises interest rates an expected 75 bps in September and continues to shrink its balance sheet.”

“We believe the dollar will strengthen against both G10 and emerging market currencies, only peaking once Fed policymakers start to consider unwinding rate hikes as the U.S. economy enters recession.”