Inflation is working its way into FX pricing in major currencies, primarily through rising real interest rates as central banks become more hawkish in response to persistent inflation.
John Velis, FX and macro strategist Americas at BNY Mellon Markets, notes that since expectations around the US Federal Reserve began to move in a more hawkish direction, the US dollar index has risen over half a percentage point.
The way the major central banks choose to fight inflation … forms the foundation of what could be a volatile year in FX trading
Ipek Ozkardeskaya, Swissquote
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