Fear Of Recession Caused Dollar To Retreat, Feds Meeting Is Due Next WeekDecember 12, 2022
The trading price of the dollar recorded a pullback in the Friday trading session of the European market.
The constantly rising concerns and fears around the recession of the US economy are the main drivers behind the dollar’s weakening.
Fear of Recession
There is a constant fear among market analysts and traders that the economy of the United States is headed toward a recession.
Even though it is just a fear, it is enough to hold back the traders from throwing their investments in favor of the dollar. With the traders pulling out of their investments, the support for the dollar is going away.
The US Feds Have Increased the Chances of a Recession
Thus, the trading price of the dollar is growing weaker. This is the situation that the US Feds had been trying to avoid.
They did whatever they could to avoid it but as a result, they have increased the recession fears even more. Initially, the Feds increased the interest rates and it worked out in favor of the US economy.
The analysts have now realized that if the interest rates continue getting hiked, then it will be problematic for the entire US economy.
The increments in interest rates are already a great level of concern among the working class. If they keep on rising, then the situation may get worse and the Feds will have no way to deal with the situation.
The Upcoming Feds Meeting
According to the experts, the next US Feds meeting is going to prove very crucial for the US economy and the people. If they stick with decreasing the interest rate hikes, then the recession fears may lower.
However, if they decide to increase the interest rates by 75 bps again, it would prove to be very catastrophic for the entire economy.
While fighting the rising inflation rates, the US Feds have ended up pushing the entire US economy to an edge. If the US Feds do not take a step back, then the US economy will lose its balance and fall into recession.
The US Feds must realize this and act fast to bring the fears under their control and provide assurances to the public and the investors.
The DXY fell by 0.1% again
In recent weeks, the performance of the US dollar index (DXY) has been quite negative. It has continued moving in the negative direction and even the recent trading session shows it has declined by 0.1%.
The overnight plunge was even more concerning as it saw a 0.3% dip. At the time of writing, the DXY is hovering at 104.688.
The data shared by the US Feds for the jobs showed that the number of claims for unemployment has recorded a moderate increase.
The Thursday report shows that the ongoing claims have also recorded a huge rise. They have risen to a 10-month high, a huge concerning matter as it is adding fuel to the recession fears.
There are several speculations about the US economy but the most prominent one is the recession. It has been predicted by many market experts that the US economy may fall into recession in the year 2023.
Bank Leaders are saying the same
Even analysts and highly influential investors from the major US banks have acknowledged the same prediction. They also fear that the US economy would falter and the people will face a recession.
In the running quarter, the DXY has recorded an overall 7% dip, a very alarming situation for US dollar traders.
Dollar Vs Five Major Currencies
The report shows that the value of the USD has fallen 0.2% against the CNY while it has traded flat against the AUD.
The EUR has managed to grow by 0.1% against the dollar while the GBP has recorded a similar surge. The value of the USD has reportedly dipped 0.2% versus the JPY.