Dollar Slumps Ahead of Fed as Stocks, Gold Rally
The dollar sank to the lowest level in almost four years, reflecting investor caution toward the world’s reserve currency amid unpredictable policymaking from Washington. The weakness spurred a rally in the yen, gold and US stocks.
The Bloomberg Dollar Spot Index slid to its lowest since February 2022 as signs of US support to boost the yen reinforced the argument about potential coordinated intervention to guide the greenback lower against key trading partners. The decline accelerated after President Donald Trump said he was not concerned about the weakening.
The yen touched its strongest level against the greenback since October in Tuesday’s session to trade around 152 per dollar. Gold, silver and crude oil — all priced in dollars — rose and the S&P 500 Index closed at an all-time high. While equity-index futures for several Asian gauges advanced, those for Japan retreated as a stronger yen is typically a headwind for the country’s equities.
The dollar has weakened amid uncertainty over policy from the Trump administration, including threats to take over Greenland and comments that have raised concerns about the Federal Reserve’s independence. Investors face a pivotal week, with the central bank due to announce its interest-rate decision on Wednesday and megacap technology companies beginning to report earnings.
“The Trump administration is taking a calculated risk,” said Win Thin, chief economist at Bank of Nassau 1982 Ltd. “Foreign exchange typically is the leader in terms of showing market discomfort with a country’s policies and economic outlook, so this dollar weakness bears watching.”(asd)
Source: Bloomberg
