The dollar weakens on the prospect of an end to interest rate hikes… Dollar index, lowest in about 3 months
Dollar index, lowest since September 1st… Down 2% last week
Euro, highest since August 15th… The yen is also strong
The value of the U.S. dollar continued its downward trend, falling to its lowest level in about three months since early September.
Reuters reported on the 20th (local time) that this is because investors generally view the U.S. Federal Reserve’s (Fed) interest rate hike cycle as having ended and are now paying attention to the timing of the start of interest rate cuts.
The dollar index, which compares the U.S. dollar with six other major currencies, recorded 103.37 on this day, falling to its lowest point since September 1.
The dollar index fell about 2% last week, the largest weekly decline since mid-July.
According to recent economic indicators, as economic and inflation pressures show a slowdown, the possibility of additional interest rate hikes by the Federal Reserve is greatly decreasing.
In fact, according to the Chicago Mercantile Exchange (CME) FedWatch, the market believes that the interest rate hike within the year has passed and is now paying attention to the timing of the Federal Reserve’s interest rate cut.
The likelihood of a reduction of at least 0.25 percentage points by May next year is more than half. By now, the probability of an interest rate cut is 57.8%, and the probability of a freeze is 41.3%.
“The market is confident the Fed is done raising rates, but the Fed is not willing to say so,” Joseph Trevisani, senior analyst at FXStreet.com, told Reuters. “We all know this, we’ve seen it and heard it before.” He said.
He added, “The dollar is weakening because the Federal Reserve is doing its best to prop up interest rates rather than the dollar.”
As the value of the dollar falls, the value of the euro and yen is rising in the international market.
In the case of the euro, it hit $1.0952 per euro, the highest since August 15th.
The dollar was trading at 148.36 yen per dollar against the yen.