Dollar Drops by Most on Record as Traders Brace for More Pain
A Bloomberg gauge of the dollar dropped the most on record, as fears grew that President Donald Trump’s sweeping trade tariffs would batter the US economy.
The 2.1% tumble in the Bloomberg Dollar Spot Index on Thursday was the measure’s sharpest intraday decline since its launch in 2005. The greenback was down 1% or more against every Group-of-10 currency individually, at one point dropping by the most in almost a decade versus the euro. Investors are bearish on the dollar in the coming month for the first time since September, options data show.
The tariff regime “hurts US credibility and will have a more negative impact on the US consumers and companies, if it will remain on for any significant length of time,” said Leah Traub, a portfolio manager and head of the currency team at Lord Abbett & Co. “This will drive investors away from the US and will cause the dollar to depreciate.”
he weakness in the dollar comes as traders struggle to assess how the measures — which were harsher and wider-ranging than many had expected — will impact US growth and inflation in the coming months.
For now, many see a slowdown in the American economy as a bigger threat than a resurgence in inflation. That’s fueling bets that the Federal Reserve will cut rates further than expected to boost growth, adding to depreciation pressure on the greenback.
Source: Bloomberg
