The value of the US dollar approached its lowest level last Friday, and analysts expect the dollar to record the largest weekly decline since last November. This comes after the issuance of data on the US economy’s inflation showing weakness in the economy’s performance and deepening fears of ending the high interest rates.
Investors’ bets strengthened and investor confidence in the US dollar waned after the release of weak data pointing to a slowing economy and market jitters. Investors now increasingly expect the US Federal Reserve to have reached the end of its rate hike path. This increases the decline in the value of the dollar and reduces the possibility of an additional rate hike in the near future.
Dollar performance On a general level, the dollar fell 0.3% against a basket of major world currencies. The dollar index, which measures the performance of the US currency, reached 92,723 points, its lowest level since April 2020. The dollar was affected by the decline in annual yields of US bonds, the rise in gold prices, and the low pace of foreign investments in the United States.
The impact of the US economy
For its part, weak US inflation data pushed the dollar lower. The data showed signs of a slowdown in the economy and slowing down inflation. The dollar’s decline was also attributed to global trade tensions and fears of a global economic slowdown caused by the COVID-19 pandemic.
potential impact of US monetary policy
Analysts believe that the US Federal Reserve may move somewhat regarding monetary policy in the coming period, and this reinforces the weakness of the dollar. After there were expectations of a rate hike next year, it is now believed that the Fed may adopt a more dovish stance and reduce the strength of the rate hike process in the future.
In the end, the decline in the value of the US dollar and the high probability of its future decline reflect the general concern about the strength of the US economy and the optimism of investors about other economies. Given the current tensions in the global market, this decline may continue in the coming days.
