SAWT BEIRUT INTERNATIONAL

| 24 July 2024, Wednesday |

Dollar extends drop, still vulnerable after Fed

After dropping to its lowest level since July last week as the Federal Reserve softened its hawkish tone and moderated U.S. data, the U.S. dollar continued to weaken on Monday.

The dollar index dropped by almost 1.4% the previous week and was now circling about 104.84, a 6-1/2 week low.

At a height of $1.0756, a 7-1/2 week high, the euro gained 0.2%.

The previous week saw the best week for global equities (.MIWD00000PUS) in a year as hopes that the Fed will stop hiking rates began to build.

Other indicators such as weakness in U.S. jobs datasofter manufacturing numbers and a decline in longer dated Treasury yields also hurt the dollar, while stoking rallies in sterling and the Aussie dollar , and causing the yen to bounce from the weaker side of 150 per dollar.

“We always say bad news (weak economic data) is good news,” said Tina Teng, a market analyst at CMC Markets in Auckland. “So it’s good then there is expectation for the Fed and other central banks to end the rate hike cycle sooner.”

She expected the dollar to remain on a weaker trend through November.

Dane Cekov, senior FX strategist at Nordea, called last week’s moves an “over-reaction”, saying the jobs data was a “mixed bag”.

“You could still see a somewhat weaker dollar in the short-term, but if the (euro-dollar) rally continues it needs to get some fuel from somewhere.”

    Source:
  • Reuters