The wave of US dollar buying on Tuesday caught many market participants unaware and sent a wide range of asset markets to multi-month and multi-year extremes. The incessant USD buying was sparked by heightened fears that the world’s largest economy may be nearing, or is even in, a recession as economic growth slumps. The Federal Reserve’s late to the party response to tackling inflation of hiking interest rates at a record pace and level has slammed the brakes on economic activity. US Q1 GDP contracted at an annualized rate of 1.6% and the closely watched Atlanta Fed’s GDP Now measure shows Q2 US GDP contracting by 2.1%. If this is the case, the US would be in a technical recession.
