The dollar fell to a three-month low today. Investors continue to believe that growth in the world’s largest economy is starting to slow after a cycle of interest rate hikes by the US Federal Reserve (Fed).
The loss of more than three percent
The dollar index, which measures the value of the dollar against a basket of six major world currencies, was writing off more than half a percent at around 6:10 p.m. EDT, hovering around 102.648 points. The U.S. currency is headed for a monthly loss of more than three percent, which will eventually be its worst performance since last November. The euro rose half a percent to $1.1005 against the dollar at the same time.
Against the Japanese yen, the dollar fell 0.9 percent to 147.43 yen. The single European currency depreciated 0.4 percent against the yen to 162.25 yen.
Probability of interest rate cuts
The probability that the Fed will start cutting interest rates as early as March is 23 percent, according to the FedWatch Tool. In the case of a May Fed meeting, the probability rises to 50 percent, according to the same indicator.
“For several decades, the dollar has tended to outperform when the US economy is exceptionally weak or strong compared to the rest of the world,” said analyst Karl Schamotta of Corpay. “As a rule, it has fallen again under the circumstances that are now in play, with most major economies floundering in the mire and the growth gap between the U.S. and the rest of the world narrowing,” he added.
Source Czech Press Office