The value of the US dollar in 2022 and beyond

However, the recovery of the dollar in 2022 is far from certain due to the global economic healing. Let’s take a deeper look at this year’s US dollar news and see where a 2022 US dollar estimate might take us. This article will help you decide if you want buy USDC or another cryptocurrency this year or invest in other traditional assets.

Forecast 2022 USD

The USD struggled throughout 2020 and the first half of 2021.

However, with positive labor data and an expanding economy, there are several things that could favorably impact a US dollar projection. However, the combination of economic depression and inflation fears means that uncertainty persists. Let’s take a look at some of the defining elements.

The Federal Reserve and monetary policy

The Federal Reserve (Fed) has maintained relatively loose monetary policy throughout the pandemic. However, the central bank was forced to scale back quantitative easing, with November’s consumer price index showing a 6.2% increase (the biggest increase in inflation in more than 30 years ).

Before diving into recent events, consider the monetary policy narrative of the past year.

During the worst pandemic, the US Federal Reserve cut interest rates to a record low of 0% to 0.25%. It launched a quantitative easing programme, buying $120bn (£89bn) of monthly bonds. The US dollar has weakened in 2020 due to the Fed’s ultra-loose monetary policies.

The Fed raised its growth forecast in early June, saying two interest rate hikes were likely in 2023. It expected no rate hike in 2023, instead anticipating the first interest rate hike in 2024. during the initial meeting. Following the statement, markets rallied, with the US dollar posting its biggest one-day gain since March 2020.

The Fed reiterated in early August that if inflation remained low, interest rates would not be raised until 2023. Despite recent CPI statistics showing the largest increases in inflation in decades, the Fed has since changed attitude.

In response to rising inflation, Wells Fargo senior economist Sam Bullard said supply disruptions and the resumption of services raise concerns that higher-than-expected inflation could last longer. than the Fed thinks.

Moreover, he added that they expect goods inflation to hand over to services over the next year. However, supply chain constraints will continue to fuel the flames of near-term inflation.

The Federal Reserve’s December update

The Fed said Dec. 15 that while interest rate hikes would be delayed until labor market conditions “have reached levels supported by Optimal Employment Committee assessments,” net purchases of assets would be reduced by $20 billion for Treasury securities and $10 billion for agency mortgages. -Equity-backed monthly starting in January.

Forecast for the US currency in 2022: Rise in retail sales

According to the US Department of Commerce, retail sales in the United States exceeded estimates in October. Inflation did not affect consumer spending in the United States, as sales rose 1.7%, well above economists’ expectations.

Comparing October to September, department store sales increased 2.2%, electronics sales increased 3.8% and Internet store sales increased 4%. While this data provides strong evidence that the US economy is improving, it’s crucial to point out that higher levels of inflation are skewing sales numbers.

As inflation increased by 0.9% in October, the rise in prices may account for about half of the increases.

Final Thoughts

Despite lingering uncertainties and continued volatility, there are plenty of reasons to be bullish on the US dollar.

Dollar bullish sentiments could last well into the new year with a robust pace of economic recovery, monetary tightening to address severe inflation concerns and strong employment numbers.

Comments are closed.