At Topseater Bee 2020, which many investors believe is marking the beginning of a currency depreciation, the US dollar has drifted from a lifebuoy.
ICE USD Index DXY,
According to FactSet, unit measurements for the baskets of the six major rivals fell 6.7% annually, the first annual decline since the 9.9% decline in 2017. In addition, Thursday’s index reached a low of 89.52. The lowest since April 2018. Below 88.25 will cancel the 2018 lows.
The decline in the index occurred after the financial panic caused by the COVID-19 pandemic in February and March triggered a surge in the dollar that pushed DXY to a high of more than three years. It was believed that the Fed’s actions to inject liquidity into financial markets and expand or establish swap lines with foreign central banks helped the dollar move south.
“In less than three months by 2020, the dollar was slightly weaker than the Hong Kong dollar, but it was the strongest major currency in the world,” said Kitjacks, global macro strategist at Societe Generale. “But since the Fed’s series of policy measures in late March, it has been vulnerable to almost everything, with the notable exception of the Turkish lira USDTRY,” he said.
And Brazilian Real USDBRL,
The weaker dollar was greatly welcomed by investors who saw it ease the global financial situation. The weak dollar is seen as a net plus for global equities, including the US and emerging markets.
read: What the depreciation of the US dollar means for the stock market is:
The weak dollar is also seen as a plus for commodities, and it has bounced sharply from stock-like spring pandemic-inspired losses.
to see: Depreciation of the dollar could drive the 2021 commodity boom
DXY has a great deal of emphasis on the Euro EURUSD.
It fell 0.7% to $ 1.2216 on Thursday, but rose 8.9% annually to a 33-month high against the dollar. The European Central Bank is one of the unwelcome parties to the weaker dollar as the stronger euro puts pressure on import prices and makes it more difficult for banks to reach their elusive inflation targets near 2%.
Brad Bechtel, global head of Forex at Jeffreys, said in a note that it would take more than $ 1.25 to move the euro to boost DXY through 88.00 support.
It seems to be “destined to happen” as 2021 begins, he said, and the ECB continues to deal with stronger currency deflationary pressures and “persistent viral overhangs.”
He believes the DXY will not be well below 88 and the euro will not be well above $ 1.25. “But as we move into the first quarter of 2021, we can learn more about it.”
Jax said dollar sales paused in the summer, but all key trend data returned in the second half of the first quarter after the Fed took action.
“Perhaps the big trend is already underway as vaccines play a role, and we’re riding the wave of vaccine optimism undertaken by easing funding for the first half of next year. “He wrote.
The dollar is suffering the first annual decline since 2017
Source link The dollar is suffering the first annual decline since 2017