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EUR slips below USD for second time in 20 years, Greenback’s strength leads to biggest weekly gain since March 2020 – Finance Bitcoin News
The US dollar has been very strong against a myriad of fiat currencies around the world, and this week the euro fell below the USD for the second time in 20 years after meeting parity with the dollar in mid-July. The dollar’s recent strength has resulted in its biggest weekly gain since March 2020, according to Commodity Futures Trading Commission (CFTC) data.
US dollar rises, euro falters — Stocks, precious metals and cryptos are falling
On Monday, the Dow Jones Industrial Average fell 400 points as inflation fears continue to grip Wall Street. The four major stock indexes – NYSE, Nasdaq, Dow and S&P 500 – all started the morning (EST) in the red compared to gains recorded last week. The gold and silver markets have felt downward pressure this week as both precious metals are down in value on Monday morning. Furthermore, the global cryptocurrency market cap is down 1.4% today as well, hovering just above $1 trillion.
At the start of the week, the euro has fallen below the US dollar for the second time in 20 years. At the time of writing, the two fiat currencies are trading for exactly the same value, but the euro fell to $0.99 early Monday morning (EST). The euro fell below and meeting parity with the USD also took place on July 12, 2022, when the USD rose to 1.0098. On Monday 22 August, the dollar index (DXY) continues to show strength at 108.711.
Reuters reports that the fall of the euro on August 22 is due to an energy and petroleum crisis that Europe has been struggling with since the start of the war between Ukraine and Russia. Meanwhile, Reuters also posted data originating from the CFTC, and the numbers show that “US dollar net longs hit the highest since early March 2020.” Many believe that as long as the war continues and the Federal Reserve continues to raise interest rates and tighten monetary policy, the dollar will remain robust.
China’s property chaos prompts the central bank to cut interest rates amid fears of rate hikes in the US Federal Fund
In addition to the robust dollar and the war in Europe, China’s economy has had a major real estate crisis. Earlier this week, the mega theater chain in China Cineworld showed signs of financial weakness and there was speculation that the company was close to bankruptcy. On Monday, China’s central bank cut the benchmark lending rate and the benchmark mortgage rate to ease pressure on the economy.
With the strong dollar, Wall Street’s main indices in the red, gold and silver down, and the crypto-economy soaring, reports indicate that fears stem from the Federal Reserve’s next rate hike. However, after the US central bank raised the federal funds rate by 75 basis points (bps) last month, estimates compiled by Reuters say the Fed could be softer this month.
“The U.S. central bank will raise interest rates by 50 basis points in September amid expectations that inflation has peaked and growing worries about a recession, according to economists in a Reuters poll,” the report said.
What do you think about the strength of the US dollar and the euro falling below the value of the dollar? What do you think about the macroeconomic problems plaguing today’s financial markets? Let us know what you think about this topic in the comments section below.
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