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US Growth And Fed Hikes Power Dollar Rally
- The dollar's surge is driven by strong US growth and aggressive Fed hikes that other central banks can't match.
- Kamakshi Trivedi points to rapid 75bp moves and an unconstrained Fed widening interest-rate gaps versus peers as the key mechanism.
UK Tax Plan Shocked Gilts And Weakened The Pound
- The pound's plunge was driven by UK-specific unfunded fiscal expansion which raised gilt risk premia.
- Trivedi explains markets demanded higher yields, forcing either cheaper gilts or a weaker pound to attract investors.
Stronger Dollar Aids US Inflation But Harms Others
- A stronger dollar helps US disinflation by lowering local import prices but tightens global financial conditions.
- Trivedi notes the trade-off: inflation benefit for the US versus export and growth pain for other countries.