USD | CAD - July 2022: FX Outlook Economic Outlook and Summary June started calmly and ended in a panic. US inflation surged to 8.6%, well above the 8.3% forecast, and stocks plunged. The month ended with the SP 500 index having its worst first half since 1970. FX markets were volatile, with traders reacting to inflation data, central bank monetary policy, equity market price swings and fluctuations in the US 10-year Treasury yield. When June ended, only the Swiss franc was above water (compared to the US dollar) and it had an edge from a surprise Swiss National Bank (SNB) rate hike. A rate hike didn’t help the New Zealand dollar, which ended the month as the worst G-10 currency, and that is despite expectations for a similar increase on July 5. The US dollar index closed the month with a 2.65% gain. The Russia and Ukraine war continues to stoke Eurozone recession risks so much so that some analysts are suggesting the ECB may be unable to raise interest rates aggressively to fight inflation. The USD and Federal Reserve In the game of chicken between the Fed and financial markets, the Fed blinked.