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US Dollar is Really Strong Amidst the Recession

by Didimax Team

The index of US dollar which is also known as DXY was quite strong. It survived around the level of 104.50. It can be seen from the Tuesday trading data in the forex market. 

That major currency was supported by safe haven demands amidst the increasing concerns about global recession risks. As we know that recession becomes a thing which is feared by many market participants. 

Swiss dollar, greenback, and also Japanese Yen were moderately increasing. It is especially to some currencies which have a higher risk. How this thing can be occured in the market?

The cause is an action done by a lot of investors out there. They want to get a safer position in the Market. In fact, what they have done affect many aspects in this forex industry.

 

Consumers Trust In America Slumped Drastically 

The index of consumers trust was released last night. It was for the June period this year. The released was quite surprising where it showed the significantly decrease up to 98.7%.

It was different than what the consensus wanted since they just hope 100.4 decline only. Meanwhile, the index for May period was also revised . That was from 106.4 to become 103.2 

People should know that The index of consumers trust like this refer to the level of 100. How if it is beyond that limit? The more than 100 value means there is an optimism there.

Vice versa, under a hundred means pessimism. The consumers have a pessimistic point of view to the economic condition in the future. That is why; they choose to keep their money and reduce the shopping needs. 

Is that Release a Sign of Recession? 

Based on that release, it can be noted that many market participants are worrying if that is a sign of further recession. In fact, the economic slow down will inhibit the effort done by Federal Reserve.

This effort is related to a plan for raising the interest rate in order to handle the inflation progress. Elsewhere, the Dow Jones index was also lower. It declined by 1.56 percent. 

The same thing was also happened at the Asian stock market. One of them is IHSG BEI which this part was 0.77 percent lower based on the release. In the other place, the rally effort done by Euro isn’t that smooth. 

The Fed interest rate expectation is not the only thing which is disturbed. The same things also happen on the other major central banks policy projections could be seen in the market. 

EUR / USD Pair Slumped Again

EUR / USD is a pair which was slumped again. The value was from 1.06 two days ago and it became 1.05 yesterday. The cause is a same pessimistic aspect happened. 

The European Central Bank has been said it’s plan to raise the RaTe. The most possible time was in September and Also July this year. Christine Lagarde as it’s leader gave her speech then. 

Unfortunately, that speech didn’t give any clear clued about how high the interest rate increase value will be. She just said about the further policies will highly depends on the enomic situation. 

The dovish ECB and also the economic condition of the countries members will make EUR is weaker. Many analysts believe that ECB will still dovish or maybe even more versus the other G10 central banks. 

A Prediction about EUR / USD Position 

The situation above will continue to appear until they solve the fragmentation problems. The involved parties said that they maintain the EUR/USD prediction for this year in 1.05.

That was under the consensus prediction where they thought that it will be around 1.10. Maybe, the EUR/ USD will reach the 1.15 in 2023. In 2024, it can be around 1.20.

The experts assumption is that FX steps back to a long term equilibrium which means around 1.20 up to 1.25. However, uncertainties still high until after this year. 

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