The US Dollar index versus a basket of foreign currencies rose 28% from the start of 2021 to a peak in September 2022. This move was driven by the US Federal Reserve’s decision to raise interest rates and shrink its balance sheet, which had ballooned during the Covid pandemic. In some cases, the Fed moved before their overseas counterparts did. The result was a rising currency supported by high US Treasury yields. The stronger dollar caused some international markets to underperform in US dollar terms, particularly those with currencies with strong inverse dollar relationships.
US Dollar Index – Weekly
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