With a more dovish outlook than others, ING Bank sees EUR/USD falling to $1.10 by the end of 2022, whereas JP Morgan predicts $1.12 by the end of September 2022. Such divergent policy from the Federal Reserve may see the euro slide against the greenback. ECB chair Christine Lagarde recently sought to cool market expectations of a hawkish turn by saying that the ECB “must not rush into a premature tightening” and that “the conditions to raise rates are very unlikely to be satisfied next year”. While markets have recently been skeptical of the European Central Bank’s insistence that they will not be raising interest rates any time soon, this is perhaps a mistaken position. For the same pairs, respectively, Morgan Stanley foresees $1.18 and 118 yen, while Goldman Sachs predicts $1.18 and 111 yen. The outlook for the US economy is strong, with unemployment recently falling to 4.6%.īarclays predicts end-of-year rates of $1.19 for EUR/USD and 115 for USD/YEN. Markets previously expected a hike around September 2022, but the Fed may now move as early as the first half of the year, with a 0.25 percent increase, and subsequent 0.25 percent hikes in further quarters. The Fed has now indicated its willingness to be flexible in response to the economy’s ebbs and flows, which increases the likelihood of a rate hike earlier in the year than previously expected. Currently scheduled to end purchases in June, the Fed may actually decrease its scale of purchasing faster, with a sooner final end-date. As a consequence, the Fed is prepared to accelerate the tapering off of its massive bond-purchasing program. The Federal Reserve has changed its position on continued inflation, with chairman Jerome Powell predicting that it will remain high well into 2022. The IMF predicts global economic growth of 4.9% in 2022. Nevertheless, the economic outlook for 2022 is broadly positive, with policymakers cautiously confident of a strong recovery. Market worries remain for the year ahead, to do with new Covid variants, central bank ability to rein in inflation, and continued global supply shortages and international shipping delays. Join us in this article as we look at the events to expect that matter to global businesses in 2022. From President Biden’s $1.9 trillion Covid-19 Rescue Package bill to divergent global central bank monetary policy in the first half of the year, and more recently, from the supply chain crisis to rising global inflation, there have been many important developments that have shaped currency performance. 2021 has been an eventful year in foreign exchange and global business.
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