The dollar is nearing an 8-month low | Economie

The dollar is nearing an 8-month low | Economie
The dollar is nearing an 8-month low | Economie
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1/26/2023|Last updated: 1/26/202311:33 AM (Makkah)

The dollar settled near its lowest level in 8 months against major currencies today, Thursday, as a bleak season for US corporate profits fueled recession fears, as investors await the US central bank meetings next week.

The dollar index – which measures the performance of the US currency against a basket of major currencies – rose slightly to 101.65 points, after falling to 101.52 points earlier in the session, to approach its lowest level in 8 months, which it reached last week at 101.51 points.

Trading was thin due to a public holiday in Australia and the continued celebration of the Lunar New Year in some parts of Asia.

Declining earnings, pessimistic expectations from US companies and a series of layoffs in the technology sector added to fears of a sharp economic contraction in the United States, prompting investors to reduce expectations about how long the Federal Reserve will need to continue to raise interest rates aggressively.

Economists at the financial services company “Wells Fargo” said, “Given that the Federal Reserve is no longer the one driving interest rate hikes, and in light of expectations that US economic trends will worsen, we now believe that the dollar has entered a period of cyclical decline against most foreign currencies.” “.

The Policy Committee of the US Central Bank will start meetings for two days next week, and the markets expected to raise the interest rate by 25 basis points, which is a lower rate than announced last year when it raised interest rates by 50 basis points and 75 basis points.

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Expectations of an interest rate hike

Meanwhile, the markets are expecting the Bank of England and the European Central Bank, which also meet next week, to raise interest rates by 50 basis points, and the ECB is likely to continue its monetary tightening policy.

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The pound sterling traded at 1.2400 dollars, while the euro fell 0.03% to 1.0911 dollars, although it remained close to its highest level in 9 months at 1.0927 dollars, which it recorded last Monday.

In Asia, the Japanese yen rose 0.2% to 129.32 per dollar.

Gold is at a 9-month high

Spot gold prices rose today, Thursday, to their highest levels in 9 months, supported by expectations of the end of the monetary tightening that the US Federal Reserve began implementing since March 2022.

During early trading today, spot gold prices rose by 0.18%, or $3, to $1,949 an ounce.

Gold is considered a safe haven in the event of risks and declines in the US dollar index, which recorded Thursday morning 101.3 points, the lowest level since last May.

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