Dollar falls on recession fears, speculation of Fed rate cuts
(MENAFN) The U.S. dollar hit its lowest level in nearly seven months against a basket of major currencies during Monday's trading session, driven by substantial selling pressure against both the euro and the Japanese yen. This downturn was precipitated by economic data from the previous week that intensified fears of a looming recession in the United States, prompting heightened speculation that the Federal Reserve would need to cut interest rates more aggressively than previously anticipated. The dollar index, which gauges the greenback's strength against six other currencies, dropped by 0.7 percent to 102.39, having touched 102.15 earlier in the day, marking its weakest point since January 12.
Simultaneously, the euro appreciated by 0.5 percent, reaching USD1.0968, and momentarily hitting USD1.1009, its highest value since January 2. The dollar also declined significantly against the yen, falling 2.3 percent to 143.13, nearing its lowest level this year. The downturn in the dollar's value was influenced by a combination of weaker-than-expected U.S. employment data and disappointing earnings reports from major technology companies. Additionally, mounting concerns over the Chinese economy contributed to a global sell-off, affecting stocks, oil, and high-yielding currencies, as investors flocked to safer assets such as cash.
The sell-off extended into Monday, as evidenced by the continued decline in U.S. Treasury yields, falling stock indices, and the drop in both Bitcoin and the dollar. The Swiss franc saw a notable rise, climbing approximately 1 percent to 0.8499 per dollar, reaching its highest level in seven months. In the cryptocurrency market, Bitcoin and Ether faced significant declines on Monday as investors retreated from riskier assets. Bitcoin fell by 14 percent in recent trading to USD54,078, heading towards its largest daily drop since November 2022, while Ether plummeted by about 21 percent to its lowest level since January. This broad-based market turbulence underscores the heightened anxiety among investors and the shifting economic landscape that continues to drive market volatility.
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