Forex Update, Tuesday, 28th of July, 2020
The US dollar fell to its lowest level since June 2018, as investors continue to flee away from the greenback on concerns over the US economy, the falling real yields, the boiling U.S.-China tensions, and the monetary policies by the Federal Reserve.
The world’s reserve currency has been tumbling since it topped in March, losing its status as a safe-haven currency, in response to the falling US real yields reaching all-time lows. The bond market prices a weaker economic recovery as unemployment claims have been rising coupled with the increase in COVID-19 infection cases mainly in California and Florida.
The downward pressure on the dollar index heightened last week after the escalation of US-China tensions, forcing investors to look for safety in Gold, Euro, and the Japanese Yen. China ordered the US to close its Chengdu-based consulate last Friday, retaliating after the US shut a Houston-based Chinese consulate a few days earlier.
However, the greenback found some support this morning ahead of the well-expected Federal Reserve meeting that begins later today, where the FED is expected to keep interest rates near zero for the years to come. In addition, the US Congress is expected to agree on a proposed fiscal rescue package of about $1 trillion to support the economy.
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