Dollar Soars: USD Smashes 101 Barrier in Stunning Weekly Rally
- The USD Index (DXY), a key indicator of the US dollar's performance against a basket of six major currencies, experienced a notable increase of 1.01% to 101.73 this...
- The dollar initially rose 0.14% to 100.86 from an eight-month low in early trading Monday, prompting traders to bet on a 25 basis point rate cut in September...
- However, on August 28, the greenback fell 0.30% to 100.55 as investors awaited key economic data this week and next.
USD Index Performance and Exchange Rate Updates
The USD Index (DXY), a key indicator of the US dollar’s performance against a basket of six major currencies, experienced a notable increase of 1.01% to 101.73 this week.
USD Exchange Rate in the World Last Week
The dollar initially rose 0.14% to 100.86 from an eight-month low in early trading Monday, prompting traders to bet on a 25 basis point rate cut in September and even fueling expectations for a 50 basis point rate cut.
However, on August 28, the greenback fell 0.30% to 100.55 as investors awaited key economic data this week and next. The volatility in the currency market is still driven by the prospect of an upcoming US interest rate cut, which has put pressure on the USD in recent weeks.
The DXY index rose 0.49% to 101.04 on August 29, as buying volumes picked up late in the month as traders awaited fresh economic data that could determine the pace of the Federal Reserve’s next interest rate hike. Volatility has been rife in the foreign exchange market this month, as concerns about a possible US recession and hawkish signals from the Bank of Japan have hit the dollar and sent other major currencies soaring.
The dollar continued to rise 0.28% to 101.27 on August 30, amid new data showing the world’s largest economy grew faster than expected in the second quarter, slightly reducing expectations for a larger 50 basis point interest rate cut next month by the Fed.
According to estimates by the US Department of Commerce’s Bureau of Economic Analysis, the US gross domestic product (GDP) grew at an annual rate of 3% in the second quarter, up from 2.8% last month and higher than the 1.4% increase in the first quarter. Analysts said the report also raised expectations that the US could avoid a recession altogether or only experience a mild one.
The greenback ended the week up 0.39% at 101.73 on Friday, as rising personal spending and incomes supported expectations that the Fed will cut interest rates by 25 basis points next month, rather than 50 basis points. Some investors expect a larger cut next month, given the view that the Fed is lagging in its pace of easing.
US interest rate futures are pricing in a 31% chance of a 50 basis point cut next month, down from 35% a day earlier, while bets are almost certain of a 25 basis point easing at the September meeting for the first time in more than four years. The market has also priced in about 100 basis points of cuts by the end of 2024.