US Dollar Trades Weaker as Markets Anticipate a Fed Rate Cut
Arslan Butt • 1 min read
The US dollar’s bullish streak appears to have come to a pause over rising expectations in the markets for a sudden rate cut by the Fed in the wake of coronavirus concerns. At the time of writing, the US dollar index is trading around 99.22.
On Monday, Wall Street experienced a shop sell off as did other equity markets around the world as coronavirus cases climbed higher in countries outside China fuelling worries that slowdown in global economic growth. Global supply chains have been severely impacted over the extended lockdown in China and has heavily impacted the sentiment in stock markets.
Markets are now expecting the Fed to cut rates by June and another one by over 50bp before the end of the year. The rising likelihood of rate cut is weighing on the US dollar, driving it lower. However the dollar remains supported as long as worries about the coronavirus cases increasing remain a possibility.
The death toll from the virus has touched nearly 2,700 in China even as authorities struggle to contain the spread of the virus. Similar measures are also being undertaken in South Korea and Italy after both countries reported a sudden increase in the number of infections.