The hope that the troubling surge in inflation will soon pass draws on fresh hope born of the widely reported outlook for new-found strength in the dollar. And the hope doesn’t come a moment too soon.
As we reported last week, the July report on consumer prices was sobering, one of the worst in recent memory. In particular, the upwardly mobile core rate of inflation suggests that inflationary pressures born of the bull market in commodities is now spilling over into other areas of the economy.
But that was last week. Many analysts are now expecting the dollar’s reversal of late will come to the rescue. The assumption is that dollar can keep climbing, or at least won’t return to its bear market status any time soon.
One analyst spoke for many with a forecast that the formerly battered buck is headed for better days. “The fundamental picture for the dollar has improved substantially in recent weeks,” Fiona Lake of Goldman Sachs told the Financial Times over the weekend. “As a result, we now think the dollar has bottomed.”