Some Buck
by AIB Treasury Economic Research Unit
- Although the US dollar has retreated from last year’s peaks, which saw it reach its highest level on a trade-weighted basis in 20 years, it has remained at very elevated levels in 2023.
- The continuing strength of the dollar is very much linked to the ongoing impressive performance of the US economy and the elevated level of US interest rates.
- Against this backdrop, the Fed has raised rates by 525bps to a 5.25-5.50% range.
- The high US rate environment is providing considerable support for the dollar, helping it to make ground over the summer.
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