An upside surprise in the latest US inflation report is fueling speculation of interest rates that remain higher for longer, a trend that will ratchet up the financial pressure on highly indebted US consumers (not to mention their government). But there’s another aspect of a (forced) high-rate environment that bears further examination: a stronger-than-normal US dollar. The greenback was already undergoing an extended post-pandemic rally, of which the latest US inflation report has given renewed impetus, and these rising valuations continue to ripple through the global economy.
Winners and Losers in the Greenback Rally
