ECB’s surprising move was a milestone for many reasons
Central banks around the world are starting to sing from the U.S. Federal Reserve’s hymn sheet - and it could well be a coda to the dollar’s startling appreciation of the past year.
In tune with the choir, Bank of England chief Andrew Bailey said on Tuesday the BoE too was considering stepping up its rate rise campaign, with its first half-point hike since gaining independence 25 years ago “on the table” for next month’s meeting. But heightened hawkishness over the coming months - likely as much a political signal to governments, business and wage bargainers as anything - was taken on board by investors nonetheless.
And so if signs of “catchup” from other major central banks erodes perceptions of Fed exceptionalism, it could well take the heat from this year’s roaring dollar rally - even marking a top after this month’s brief flirtation with euro parity and after a near 20% surge on its DXY index since the start of 2021.One of the most striking readouts from this month’s global fund manager survey by Bank of America was that “long U.S.
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