Should-Read: David Beckworth: It’s Policy Divergence, Not China, Driving the Dollar
Should-Read: David Beckworth: It’s Policy Divergence, Not China, Driving the Dollar: “President Trump is worried about the strong dollar… said… China holds down its currency…
…The real issue is… the diverging of the current and expected paths of monetary policy…. The Fed has been tightening and is expected to continue do so with further rate hikes in 2017. The ECB, on the other hand, is still running its QE program and is keeping it short-term policy rates pegged close to zero…. The surging dollar… is something to worry about…. But… [it] is a very different problem than the one President Trump sees with the strong dollar.