The dollar is up almost 5% against major world currencies since June as global economic data miss forecasts at a rate not seen since 2020
A surging dollar signals for some the clearest sign of an ebbing money tide and an abrupt slowdown of the world economy over the remainder of 2021 at least.
Though these have been modest so far, HSBC on Thursday downgraded global GDP forecasts for this year and next, seeing growth almost halving to as low as 3% by 2023. Such dollar surges are often both a reflector and amplifier of financial stress and have a habit of snowballing. As many major central banks step back from emergency pandemic settings and China’s credit impulse slows, global liquidity growth has fallen and stock markets retreated.
“This episode has all the ring of a major policy error,” it said, adding that recent gains in the dollar and flattening of the US Treasury’s five to 10 year yield curve in inflation-protected securities were a decent guide to monetary conditions and show how markets are pricing gradual tightening ahead. If central banks get any more aggressive, these market moves would get supercharged.
A combination of rising US real rate premia and a preference for dollar cash in a stressed financial environment could well push it much higher into year-end as the Fed prepares to execute the first tapering of its bond buying spree.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Somalia opens first public oxygen plant to help treat Covid-19 amid severe shortageSomalia's first public oxygen plant opened on Thursday, in a ray of hope for a country where a lifesaving treatment for the coronavirus has been largely unavailable to patients during the pandemic.
Read more »
UK trims plans for helping the poorNew programme begins as larger ones fall away as energy prices surge
Read more »
Capitec expands active client base by 15% and boosts digital platformsThe bank says headline earnings per share surged 513% during the six months to end-August
Read more »
H&M’s Creator Studio wants share of stars’ branded productsH&M will offer creators on-demand printing ‘through a sustainable supply chain and a global network’
Read more »
SA is one of world’s worst nations on UN organised crime indexIndex paints a gloomy picture of the global scourge, which has increased during the pandemic
Read more »
Profits surge as nimble business model helps Bidcorp weather Covid stormThe food services company says decentralisation helped it trim operating costs by 13.4% in constant-currency terms
Read more »