By Wong Kon How
The dollar has shed more than 4% so far this quarter, falling back from a two-decade high it reached in September. Last week, investors turned bearish on the greenback for the first time since July 2021.
What are the reasons and the risks of a weaker dollar?
3 Reasons:
1. Dial down interest rate hike
Surprised inflation data in the United States, which showed that prices rose more slowly than expected in October. That bolstered expectations that the Federal Reserve could dial down interest rate hikes soon.
2. Optimism in China & Europe
China could be preparing to ease coronavirus restrictions and Europe’s warmer fall lead to slightly more optimistic economic forecasts. If these economies perform better than expected other currencies could look appealing again.
3. Sanction effect
With the wider use of sanction, countries are turning to other alternatives.
Through the study of its development and follow-by its price behaviours, our weekly case study spotted the peak of the dollar during the close of September.
Following a case study down on Dollar Index on 03 Oct 22:
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