Doldrums for USDX as it hits 93.720 in forex markets

Chris Lee

The US dollar index was seen at its worst for two years earlier this week – and forex traders and analysts appeared unwilling to predict an immediate turnaround in its fortunes.

The currency, which during the recent coronavirus pandemic was seen to rise in value significantly as traders flocked to its cash-friendliness, has had a real reversal of fortunes.

In its index, which is a tool designed to monitor how the currency is performing compared to several other currencies from around the world, was seen at 93.720.

This was its worst performance since the early summer of 2018.

It also performed badly against several individual currencies across the globe.

Against the safe-haven Japanese yen, for example, it was spotted at 105.05.

This was close to the four-month low that it saw the day before.

The single European currency, meanwhile, was seen at $1.1723 in its pair against the greenback.

This reflected a rise on the previous day, though it retreated somewhat from the position it saw earlier in the week.

That position, a little closer to $1.18, was its highest for two years or so.

A number of factors contributed to the poor performance of the dollar and the consequent surge of other global currencies.

One such factor was the growing view that the American economy will struggle to come back from the impact of the coronavirus pandemic.

Economic metrics are increasingly showing that the US economy is facing severe problems.

One such figure was the consumer confidence metric for July, which plummeted further than had been forecast.

The public health figures are also startling investors in the dollar.

Almost 10% of states across the US revealed on Tuesday that they had seen day-on-day records for deaths from the disease.

According to analysts, the consequences of this for the economy could be twofold.

The first consequence could be that a lockdown reoccurs in the country, and that this goes on to damage the already fragile economy even further.

The second consequence is likely to be that the Federal Reserve Bank could make serious decisions about the way to manage monetary policy.

There are some suggestions that the Federal Reserve will buy up more historic debt.

It could also introduce other strategies such as a yield cap.

It is currently meeting and is due to reveal its decisions later on Wednesday.

It is widely expected, however, that there will not be a change to interest rates.

One interesting consequence of the ongoing worries for the dollar is that it is fuelling demand for commodities such as gold.

On Tuesday, for example, gold was seen at $1,980.5 to the ounce, which was a record amount.

However, it later pulled back a little as trading got underway on Wednesday.

By then, it was spotted at $1,963.5 to the ounce.

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