The Fed's Tough Talk on Inflation

A lot of the strength in the dollar was a byproduct of just rhetoric, the Fed being very tough. All that tough talk about how they were going to keep on fighting and doing whatever it takes to bring down inflation got factored into the dollar. Well, the dollar is now falling because the foreign currency markets are again forward looking. The weakness in the dollar will actually be negating those hikes and will have the effect of a cut.