The US dollar is at risk of 'evaporating' all its gains from the beginning of 2024

DNVN - The US dollar is at risk of losing all of its gains since the beginning of 2024, due to forecasts that the US Federal Reserve (Fed) will cut interest rates sooner than initially expected to support the US economy.

The Bloomberg Dollar Spot Index is now at 100.426 — just 0.5% below its lowest since December 2023, all but erasing a 5% gain this year. Against the euro, the greenback is at its lowest in more than a year. Against the pound, the greenback hit its lowest in two and a half years.

The Fed's decision to begin easing monetary policy by cutting interest rates by 0.5 percentage points has put strong pressure on the USD. The debate over the extent and frequency of future rate cuts is intensifying. Traders are now betting heavily on the possibility of the Fed cutting rates by another 0.5 percentage points at its November 2024 meeting, with the probability of this scenario reaching 50%.

Lee Hardman, senior currency analyst at MUFG Bank, said the dollar has weakened significantly since late July, when the market began to expect the Fed to ease monetary policy more aggressively. He said the greenback could continue to decline in the future, although the pace of decline will slow.

Last week, Goldman Sachs revised its forecasts for the dollar against a number of major currencies, including the euro, pound and yen. Goldman Sachs said the Fed’s move showed the central bank was ready to respond more aggressively to the possibility of a US economic downturn.

JPMorgan Chase & Co. strategists said they would maintain a “neutral” stance on the dollar until U.S. labor market data provides more clarity on the Fed’s interest rate path.

Traders are closely watching U.S. growth and inflation data due later this week for clues on the direction of the dollar. The latest data, showing U.S. consumer confidence fell the most in three years, came out on September 24, adding to concerns about economic weakness.

Cao Thong (t/h)

Source: https://doanhnghiepvn.vn/kinh-te/dong-usd-co-nguy-co-bay-hoi-toan-bo-muc-tang-tu-dau-nam-2024/20240926085603104