FX markets tell Central Banks’ “Go Hard Or Go Home,”: ING

The trades in foreign exchange market point to an aggressive Federal Reserve as the primary driver, and the Russia Ukraine conflict is further having a negative impact on the currency listed on the other side of the dollar exchange.

While central banks have tried to defend their currencies from the fallout of the Ukraine war, moves in the FX market suggest central banks need to keep pace with the US Fed to maintain stability in their currencies stable.

“‘Go Hard or Go Home’ is the FX market’s message to central bankers trying to protect their currencies in the face of an energy price shock,” said Chris Turner, Global Head of Markets at ING.

“In practice, this means that unless central bankers deliver aggressive monetary tightening to somehow insulate against a Fed policy rate at 3 per cent, local currencies will continue to lose ground against the $,” he added.

Spiralling inflation is a reality and no more a

threat, exacerbated by the Ukraine conflict, as commodities have risen sharply.