There has been a lot of volatility in the major currency markets recently, and the surprising strength of the US Dollar is perhaps part of the reason.
Whilst the United States While the United States economy languishes in a similar position to that of Europe, the dollar has somehow managed to maintain headway. It has been very strong throughout the course of the last part of this year.
Maybe that is why there is a degree of volatility between the US Dollar and its Western major peers.
Largely because given the high inflation, and uncertain future of the United States economic base, which has been subject to downturns in the value of the stocks of previously stable big tech giants as well as very high inflation which has now subsided, perhaps it would’ve been easier to guess that the dollar would be subjected to the same kind of low values of the euro and British pound - but that simply has not been the case .
Now that United States inflation is actually decreased and inflation in Europe, and Britain remains very high in double figures that has been a surprising turn of events which has seen the dollar rise again.
Now analysts at Rabobank have predicted that the euro might be in for a difficult time in early 2023 I never even gone to far as to say that it might move below parity with the dollar.
The euro being below parity with the dollar has happened before, of course, but given the strength of the dollar over the last few months, it would be quite surprising if it happened again .
With US inflation now down to around 7.7% it would be easy to guess that the US economy is showing signs of restructuring itself and repairing however, those high cost associated with doing business in Europe and Britain no way heavy on big American corporations because they have to pay the continually increasing prices associated with the European size of Atlantic, which has very high inflation so that is likely to bear some extreme cost to American companies and perhaps cause invested in stocks in touch companies to take a conservative view in case the earnings are less than they might otherwise be.
Either way, a major Tier 1 bank stating that the Euro may go back below parity is definitely something to look carefully at.
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