2023-11-19 08:04:00
© Archyde.com The US dollar suffers the highest weekly losses in 4 months!
Arabictrader.com – The American recorded strong losses during the trading week ending November 17, amounting to about 1.88%, which is the strongest weekly losses incurred by the green currency in 17 weeks, affected by the growing possibilities of the end of the federal monetary tightening cycle in addition to the strong decline in US Treasury bond yields, as The dollar was subjected to strong selling pressure, which led it to abandon the 104 point level and trade below it at the end of the week’s trading.
In the following lines, we review how these factors contributed to enhancing the dollar’s weekly losses:
1. Negative US inflation data
Official US data showed that there was a noticeable slowdown and stronger than market expectations during last October, as annual inflation recorded the equivalent of 3.2%, less than market expectations that inflation would slow to only 3.3%, noting that the consumer price index stabilized at 3.7% in September. Last, the data also revealed that the annual US core inflation rate (which excludes energy and food prices) also slowed to record 4.0%, while market expectations were likely to stabilize at the same level that inflation recorded at the end of last September at 4.1%.
The negative data contributed to strengthening the downward momentum of the dollar’s performance during the ending week, as these data raised market expectations about the US Federal Reserve ending its tightening approach and not raising interest rates again at its upcoming meetings, in response to the slowdown in inflation in the country, and then the dollar was clearly damaged during trading. last week.
2. Strong decline in returns
Yields on US Treasury bonds with their various terms fell sharply during this week’s trading, indicating traders’ reluctance to buy the US dollar, which ultimately reinforced the decline of the green currency. Looking at the trading of the ending week, it is clear that the US 10-year Treasury bond yield recorded weekly losses of about 4.58%. The losses in the 20-year US Treasury bond yield amounted to about 3.45%, and the 30-year US Treasury bond yield loss was estimated at 3.65%, which had a negative impact on the dollar’s movements in the last week.
3. Statements of the less stringent members of the US Federal Reserve
Some statements issued by a number of US members about inflation reinforced the dollar’s losses this week, as these statements stated in their entirety that inflation in the United States is clearly declining with the support of several factors, the most important of which are improved supply chains and increased productivity in the country, which led to an increase in supply in the markets. The statements also touched on That commodity inflation has returned to pre-pandemic levels, and that the current position of the US Federal Reserve’s monetary policy is largely good.
These comments have fueled market expectations that inflation in the United States is witnessing a noticeable decline, and the pace of decline in inflation may continue in the coming months, reaching the Federal Reserve’s target of 2%, which will reduce the pressures facing the US Federal Reserve to continue the cycle of raising interest rates. In other words, the bank may keep… The Central Bank set the current interest rate at 5.50% during its upcoming meetings, with the possibility that the Federal Reserve will begin thinking about reducing interest rates in 2024, which has had a negative impact on the dollar’s performance this week.
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