Investors are looking for a robust global economic recovery. But this makes them prefer currency that they rate as riskier than the US dollar. As a result, it weakened against a basket of major world currencies in Monday trading.
The dollar lost 0.2 percent against a basket of global currencies at the start of the new trading week, nearing a four-month low. Its descent to current levels began at the end of March, when investors began to expect a strong economic recovery in the world, so they looked for investment in their riskier currencies. This was added to fears of rising inflation in the United States.
But in recent days, the dollar’s decline has slowed. According to analysts, expectations of a more “hawkish” view of monetary policy by the Federal Reserve, and thus expectations of a rise in the Fed‘s base interest rates, are beginning to translate into its valuation.
The fate of the $1.7 trillion fiscal stimulus package will be an important signal to the market. Joe Biden‘s administration has managed to pass it in the House of Representatives, but for now it has stumbled into a Senate dominated by Republicans.