Date
26 May 2017
The dollar fell 1 percent last week to US$1.1270 per euro and weakened 2 percent to 111.55 yen. Photo: Bloomberg
The dollar fell 1 percent last week to US$1.1270 per euro and weakened 2 percent to 111.55 yen. Photo: Bloomberg

Dollar plunge intrigues market skeptics

The US dollar declined for the third straight week as the Federal Reserve signaled a slower pace of interest rate hikes.

The greenback outperformed most developed and emerging-market currencies in the past two years as the promise of solid economic growth and rising interest rates in the United States contrasted with sluggish economic activity elsewhere.

But now investors are questioning whether the US can escape headwinds from a slowing global economy, Bloomberg News reported.

“The market has gone to an even greater degree of disbelief the Fed will raise rates, and I’m just puzzled by that,” said Greg Anderson, global head of foreign exchange strategy in New York at Bank of Montreal.

“For the market to have abandoned the dollar this soon is pretty premature.”

The Bloomberg Dollar Spot Index, which tracks the currency against 10 major peers, touched its lowest point since June on Friday.

The index’s relative strength index, a measure of momentum, fell to 24.7 on March 17, the lowest level since 2012.

Technical analysts say an RSI reading below 30 means the run of weakness has gone too far and may be poised to reverse.

The greenback fell 1 percent last week to US$1.1270 per euro and weakened 2 percent to 111.55 yen.

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RA/CG

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