At the time of its greatest glory, it was said to be a better investment than gold. Now it seems to be building on that period. Indeed, the US dollar continues to strengthen and there are no signs that the trend is about to reverse.
Dollar stronger since the start of the fight against inflation
The dollar has jumped onto a winning streak that it has been riding practically ever since the Federal Reserve declared war on forty years of inflation and raised interest rates several times in a row, also at the fastest speed in four decades.
Investor confidence is growing
And it seems that investors continue to trust US central bankers. More specifically, they are betting that the Federal Reserve’s benchmark interest rates will rise to at least the five per cent mark over the next year, which would mean an increase of at least two percentage points from current levels.
Investor confidence in the US dollar was also evident last week, when the US currency literally rolled over its biggest competitors. It sent the Japanese yen to more than 30-year lows and also gained significantly against the British pound and the euro. The pound may be the next currency against which the dollar will reach so-called parity in the near future.