USD Index Soars on Fed's Stance, Gold and Euro Tumble
USD index soared above the 93 levels after hitting twenty-seven months low on Tuesday. US dollar is among the worst-performing currencies over the last couple of months. The index is down around 7% in the past six months.
The fed has suggested that the federal government should launch more stimulus measures to help businesses in dealing with the worst economic crisis in history.
The minutes showed that all the members believe the economic situation will remain under pressure over the coming months, which could result in higher inflation and unemployment.
The US dollar has been under pressure since the Fed stepped in to counter the impact of COVID-19 related economic disaster. The fed has issued loans and grants to struggling industries. It also directed banks to issue more loans to individuals and businesses. The Fed’s strategy has negatively impacted safe-haven assets and supported riskier assets.
“There were some in the market that thought the Fed would be even more dovish overall,” said John Doyle, vice president of dealing and trading at Tempus, Inc. “And I think that is the one thing that caused stocks to sell off in the aftermath, and the dollar to gain.”
Gold price also fumbled after a rally in the USD index. The yellow metal is currently trading around $1950 an ounce. The trader’s strategy of capitalising on the recent gold price rally contributed to the latest selloff. The gold price has recently hit an all-time high of above $2000. The US and global stock market fell following the dovish stance from the Fed.
Euro slid from twenty-two months high that it had hit on Tuesday. Euro stands among the best-performing currencies over the past couple of months. Despite the Wednesday selloff, the market investors are bullish on the euro compared to the US dollar. This is because investors believe the European Union is in better economic recovery condition than the United States.