John Fahey: It dominated 2022 but the US dollar is waning

Interest rates have been a key driver of currencies in the past number of years.

Having been very much to the fore for the first three quarters of last year, the dollar lost some ground in the final months of 2022. 

A perfect storm of rising US interest rates and bond yields, and a surge in commodity prices drove the greenback higher, until the end of September. However, the currency gave up some of these gains as other central banks stepped up the pace of tightening in the last quarter of 2022, with 75bps rate hikes becoming the norm.