- In 2022, the Federal Reserve may find itself returning to its dovish self, weighing on the dollar.
- The easing of supply chains could push global inflation lower, improving the mood.
- Covid-19 will likely pop up during the year but extend its retreat.
- Rising geopolitical tensions could counter dollar selling.
- America’s mid-term elections mean Democrats will scramble to legislate.
One year up, one year down for the dollar? After two flip-flop years, there are good reasons to expect the greenback to have a rather red 2022.
In 2020, the pandemic outbreak initially sent it up, while optimism about the recovery turned it down. Inflation became a dominant theme in 2021, eventually boosting the greenback after a weak start. These three themes will likely continue dominating the dollar in 2022, alongside global and domestic politics.
Federal Reserve may swing the pendulum back down
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