"Analysis: Why the dollar's wrecking-ball rally is not done yet"

By Tom Westbrook

"SINGAPORE, Sept 14 (Reuters) - A rally that has the dollar on course
for its best year since 1984 has further to run, traders and analysts
say, suggesting more pain almost everywhere else as other currencies
either crumble or require rapid rate hikes to stay put.

The rise - the dollar is up nearly 15% against a basket of currencies
this year - has already been a wrecking ball through foreign exchange
markets, crushing the euro and yen to two-decade lows and sterling to
its lowest in nearly 40 years.

Tuesday's surprisingly hot U.S. inflation data led the latest surge as investors price in larger and faster U.S. rate rises in response and are
even speculating the Federal Reserve could hike by a full percentage
point next week.

That sort of outlook, and the backing for the dollar in markets, is a
direct challenge to global central banks, who face a choice between
watching their local currencies weaken, or slowing the process by either selling dollars or raising rates, risking a sharp slowdown in economic
growth."
[snip]

TB

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