Forex - Dollar Tests 2-Year Low Amid Doubts Over Economic Recovery - Investing.com

© Reuters.

By Peter Nurse

Investing.com - The dollar traded lower in early European trade Wednesday, languishing near two-year lows, amid doubts about the U.S. economic recovery and the Federal Reserve concluding its latest meeting.

At 3 AM ET (0700 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was down 0.2% at 93.507, not far removed from the 93.448 low last seen in May 2018. The dollar continued to lose ground both against haven and risk currencies: was down 0.1% at 104.97, was up 0.1% at 1.2946 and gained 0.3% to 1.1753.

The U.S. Federal Reserve concludes its latest two-day meeting Wednesday, and is likely to stick to a at its policy review later in the day, many of its officials having given gloomy forecasts in their recent public appearances..

While there have been some signs that the coronavirus is waning in some of the previous hotspots, four U.S. states in the south and west reported one-day records for coronavirus deaths on Tuesday and nationwide cases stayed high.

Eroding confidence in the U.S. recovery is weighing on the dollar. This isn't being helped by the perception of a lack of unity among the U.S. lawmakers, creating doubts about the timing of the next relief package.

Some Republicans in the U.S. Senate have railed against their own party's $1 trillion coronavirus relief proposal, while Democrats have called for a much larger package.

“It remains unclear as to when and in what form the stimulus will be passed, with a possible delay underscoring the downside risks to the U.S. economic recovery (already hit by rising Covid-19 cases),” said analysts at ING, in a research note. “Consequently, the prospects for a more pronounced and longer lasting U.S. dollar rebound appear to be limited, with the dollar remaining in a structural bear trend, in our view.”

This all prompted Goldman Sachs to suggest that the dollar’s reign as the world’s reserve currency is now coming under threat.

The greenback faces several risks, the investment bank said, including that the U.S. Federal Reserve may shift toward an “inflationary bias,” a rise in political uncertainty while the debt buildup as a result of the pandemic may lead to debasement fears.

“Real concerns around the longevity of the U.S. dollar as a reserve currency have started to emerge,” said Goldman strategists, in a research note published earlier this week.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Let's block ads! (Why?)

https://www.investing.com/news/forex-news/forex--dollar-lower-2244595

2020-07-29 07:06:00Z
CBMiRWh0dHBzOi8vd3d3LmludmVzdGluZy5jb20vbmV3cy9mb3JleC1uZXdzL2ZvcmV4LS1kb2xsYXItbG93ZXItMjI0NDU5NdIBAA

Bagikan Berita Ini