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USD Slumped, Market is Speculated about Interest Rate

by Didimax Team

The United States dollar slumped in Friday. That currency is going to it’s first weekly decline in this month. The cause is a speculation made by traders is decreased.

That is actually related to the interest rate which can reach it’s peak and state their point of view about the right time to do that. The goal is for sure to fight inflation which is so high. 

The slumped commodities and oil price this week is a significant factor to note. That can handle a concern about inflation and let the equity market to recover as soon as possible.

This thing also reduces the safe haven offer which has been pushing USD to some other major currencies. Based on a data, the index of USD was flat and a little bit weakened (104.3)

 

Some Factors Which Reduce the Tightening Speculation 

The condition above is pushed by a declining Euro. This moment was after the weak business activities data which reduce a speculation for European central bank tightening. 

USD has been not so good this year. So far, it has increased only 9 percent and has been loosing it’s sparks. It was started in a time when the investors started to speculate that the Fed can slow down it’s interest rate tightening. 

That was followed by another 75 basis point raise which will be applied in July. Furthermore, now they are also seeing the peak which will be happened in March next year. 

The value is around 3.5% and another possibility is to decline by 20 bps in July 2023. Many analysts are quite sure about that because the overall situation become the main supporters. 

The Treasury Yield Result Felt Down Too

The rate hike which is happened again comes with it’s effect. One of them is that it sends the 10Y treasuery yield result to it’s lowest position in two weeks. Another thing is also occured. 

Based on a report it could be seen that the index of US dollar has been losing got about 0.4% this week. That is quite big since it is hard for this currency to back on a positive track this year. 

Again, Jerome Powell as the Federal Reserve leader said about their commitment. He and his members has a string and without any requirements commitment to handle the inflation. 

Michelle Bowman as the Governor of that institution also shared his thought. In an occasion he gave his support for 50bps increase. That is especially for some meetings ahead after July. 

Price Adjustments Occur in Developed Countries

Many analysts note that price adjustment is happened in many developed countries in the world. The only cause is people’s concern about recession which is increasing. 

The pricr of oil is for an example. It slumped by more than two percent per barrel and it happeebd on Thursday. In more detail, that is after the other statements made by Jerome powell lately. 

That statement was calming a concern about the interest rate increase America which can slow down the economic growth. Ppwell said that they will do everything to handle inflation. 

No requiremebts are needed for that action. Meanwhile, the employment market also quite strong, but it is not consecutively. His comment triggers a further worry about rate hike. 

OPEC still in It’s Plan to Boost the Productions 

If the world, included USA, were in a recession, this can being an impact for demands significantly. Demand could be slowing down because of high fuel price as well. 

OPEC and it’s allies where Russia is also included, maybe will still in their plan. They want for boost the productions In August. It is hoped that this effort can make the crude oil price and inflation decease. 

That is also related with a rumor where Joe Biden has a plan to visit UAE as soon as possible. The next global production based on the agreement is around 648,000 barrel per day in July. 

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