U.S. dollar surge continues in the third quarter

Sources: Bloomberg and Wells Fargo Investment Institute. Daily data from January 1, 2018 to September 30, 2022.

Key Takeaways

  • The euro may remain under pressure and fall further while economies suffer from punishing energy prices and as recession looms. European Central Bank rate rises may only exacerbate this situation.
  • The yen may struggle to rebound as Japan is acutely vulnerable to higher fuel prices and as rising Treasury yields spur outflows. The pound may be hit hardest by stagflationary impacts of higher energy prices and a broader European slowdown, worsened by severe domestic economic and political challenges.