On Monday, the U.S. currency struggled to a ten-month low against other major currencies due to various reasons including lack of signs that the country’s economy is recovering, doubts on another interest rate hike from the Federal Reserve, and the concerns regarding the U.S. President Donald Trump’s healthcare reform.
The U.S. Dollar index inched down to 94.72 or 8% lower against six other major currencies. It has risen in the past couple of months due to the most recent interest rate hike from the Federal reserve.
Overall, the dollar has been also sent higher due to Trump’s victory November last year along with a positive outlook brought by his plans to cut business taxes and increase spending in infrastructure.
Against the Japanese yen, the dollar is hovering around a three-week low, down by 0.47% to 112.09. The euro also rallied by 0.66% to a 14-month high against the greenback at 1.1553. However, the sterling was 0.34% lower against the Us dollar after Britain's annual inflation rate fell for the first time since October in June.
The Canadian dollar rallied to a 14-month high against the U.S. dollar along with the Australian dollar recording a two-year high, up by 1.63$ following the release of the central bank’s recent policy meeting minutes offered the market a positive outlook on the economy.
The dollar also slipped after two Republican senators Mike Lee and Jerry Moran stated that they are opposed to a health care reform that will repeal the Obamacare with a new health care bill.
According to analysts, the failure of the Trump administration to pass a new health care bill would result into dampening the administration’s ability to implement a business tax cuts and boost infrastructure spending, something the US president has continuously promised to implement since the beginning of his campaign.
Fed Reserve Doubts
U.S. inflation data which was released last week showed weak numbers along with negative retail sales figures. This has led to a number of investors to believe that there would not be another interest rate hike this year as what the most markets perceived. The inflation rate is currently still below the two percent target of the Federal Reserve while the U.S. consumer price index data have risen by only 1.6% last June significantly lower than the 1.9% rise in May.
Although the central bank has recently announced another rate hike and plans to implement more next year, some Fed officials have commented that another one for this year would not be beneficial. The US central bank has also announced its plans recently to cut down its balance sheet. However, investors should remain wary of the Fed’s next moves.