Inflation and recession risk continue to weigh on currency markets
The USD has been declining in the week ending 12 August 2022 but staged a rebound against the Euro, Yen, and Pound on Friday, reports Reuters. There remains a significant probability of a 75bp hike in interest rates by the Fed in September to combat stubborn inflation, though a 50bp rise is considered more likely..
The $ appreciated on Friday against the Pound ($1.2141) and against the Euro ($1.02625) and against the Yen (Yen133.495).
If Commerzbank is right, there are costly times ahead for European businesses importing from the US (and paying in $). The bank has forecast the Euro will depreciate to $0.98 by December 2022. A year earlier the rate had been $1.18318 according to OFX
On a $10000 import, that means an extra €1,753 to pay just to convert the currency.
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