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US dollar strength

Updated: Oct 7, 2022

The #usdollar keeps strengthening against almost every currency. A hawkish fed, and the absence, for the moment, of other economic and geopolitical events in the US, have made the dollar an investment haven so far this year. Europe is suffering a critical energy crisis, due to its dependency on Russia’s gas, and several European energy companies are being currently bailed out by governments, due to margin calls on their energy derivatives. That situation combined with the #ukraineconflict add pressure to the #euro. The #yen continues to weaken as the #boj keeps printing money to maintain the 10 year jgb yield locked. As a consequence of the dollar strength, US companies with international sales are suffering margin compression because their products have become 20% more expensive on top of inflation. The world economy is not in equilibrium.

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Source: WSJ.

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