Shouldn't it be the opposite effect?
Hiking US rates usually means foreign investors will want to buy US securities for a safe and higher positive return on investment, increasing dollar demand. Only extreme rate hikes could devalue the dollar if foreign investors start to believe the US monetary policy isn't trustworthy...or if it's somehow speculated that inflation risk is behind the rate hike.
If Fed policy is trusted as truth, then an increase in rates should strengthen the dollar, not weaken it. A .25 increase is modest.
The concept behind Fed Reserve decision-making isn't much different from the correlation of how much you score points when speed dating when complimenting the potential significant other. If you tell her she's absolutely gorgeous and rate her the sweetest most beautiful girl you ever saw ---50% increase, there is a point where those compliments aren't taken seriously and message comes in "this guy is lonely and desperate. If the guy says that she is nothing special...0 interest rate, she will also be disappointed and game over.
But you tell her "actually you are quite attractive and special. Here is what I like the most in particular....... Should strengthen the odds just like dollar strengthening
Why is dollar weakening today?
Hiking US rates usually means foreign investors will want to buy US securities for a safe and higher positive return on investment, increasing dollar demand. Only extreme rate hikes could devalue the dollar if foreign investors start to believe the US monetary policy isn't trustworthy...or if it's somehow speculated that inflation risk is behind the rate hike.
If Fed policy is trusted as truth, then an increase in rates should strengthen the dollar, not weaken it. A .25 increase is modest.
The concept behind Fed Reserve decision-making isn't much different from the correlation of how much you score points when speed dating when complimenting the potential significant other. If you tell her she's absolutely gorgeous and rate her the sweetest most beautiful girl you ever saw ---50% increase, there is a point where those compliments aren't taken seriously and message comes in "this guy is lonely and desperate. If the guy says that she is nothing special...0 interest rate, she will also be disappointed and game over.
But you tell her "actually you are quite attractive and special. Here is what I like the most in particular....... Should strengthen the odds just like dollar strengthening
Why is dollar weakening today?
Why is the dollar weakening on expectations Fed WILL hike rates?