The Federal Reserve (Fed) is hawkish and preparing to deploy monetary tightening tools through higher rates and balance sheet roll-off. This leaves scope for further gains in USD, economists at Citibank report.
More room for USD to gain
“We expect at least 4 Fed hikes in 2022 and 3 in 2023 with QT likely to begin in July 2022.”
“The bottom line is that a Fed which is removing liquidity versus an ECB/BoJ which are still adding liquidity is likely to keep USD elevated medium-term.”
