Omicron, Powell and the US dollar

With financial markets already firmly in risk-off mode following the emergence of the Omicron variant, Fed Chair Powell’s suggestion that the FOMC may still increase the pace of policy tightening has added further pressure on risky assets and reversed much of the dollar’s weakness over the past few days. Should policymakers stick to their guns on policy tightening, we may well see further dollar strength in the coming weeks.
Jonas Goltermann Senior Markets Economist
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