The US Dollar has been weakening day over day over the last couple of weeks amid trader’s concerns over economic growth and increasing coronavirus numbers across the United States.
The greenback is on track to report its poorest monthly performance in nearly a decade against the basket of currencies.
The US dollar has shed almost 3.9% value this month so far and slid close to 7% since mid-May this year. The sentiments are still bearish as short positions are currently standing at the highest level in the last two years.
The steep value loss has provided huge support to commodities, particularly gold – which hit a new all-time high. The gold price soared above the $1900 mark for the first time in history. The market analysts claim that currency printing and stimulus packages have been impacting the value of greenback over the last couple of months.
The drop in the US dollar along with a 750 billion euro stimulus deal between 27 EU countries pushed the euro to the highest level in the last twenty-two months against the US dollar.
“The greater tolerance for inflation leaves room for more pressure on U.S. real yields – diminishing a key attraction of holding dollars,” said Capital Economics’ market economist Oliver Jones.
The British Pound has also been moving higher against the US dollar as investors applaud improving retail data. However, concerns are still high over the trade deal between the England and European Union. The sterling jumped against the dollar but fell back versus the common currency. The market analysts are presenting a bleak outlook for the sterling.
“With news headlines suggesting an increased perceived probability of no deal, there is a little to be optimistic about for GBP”, wrote Petr Krpata, currency and rates strategist at ING.