The dollar is not yet fully appreciated by the actions of the Fed
According to JPMorgan Chase & Co., the dollar may continue to increase until the US Federal Reserve boosts interest rates.
The Fed is becoming dragged into a global dispute about how to handle the world’s reserve currency as it tries to contain the fastest inflation in the US since the 1980s.
The dollar will peak a month after the start of the Fed
The Bloomberg Spot Index has climbed almost 5% in the last year, sparking discussion over whether the bull market is coming to an end.
“The dollar has room to soar further.” “The market will still be in some form of price discovery stage,” says Daniel Hui, executive head of global FX strategy at JPMorgan Securities. “The dollar generally peaks about one to two months after the Fed kicks off.”
The Bloomberg Spot Dollar Index rose to its highest level in 18 months late last week, following Fed Chairman Jerome Powell’s hawkish pronouncements, while two-year Treasury rates rocketed to pre-pandemic levels.
JPMorgan prefers to buy the dollar over less profitable currencies such as the euro and yen, which are the currencies of two countries whose central banks lag behind the Federal Reserve of the United States.