Dollar in demand; Recession fears start to mount

Dollar in demand; Recession fears start to mount
Dollar in demand; Recession fears start to mount
© Reuters.

By Peter Nurse – The U.S. dollar climbed in early European trade Wednesday, as increased recessionary concerns hit risk sentiment, boosting this safe haven.

At 03:00 ET (08:00 GMT), the , which tracks the greenback against a basket of six other currencies, rose 0.1% to 105.670, after rising around 0.3% overnight.

The dollar suffered its worst monthly performance in November since September 2010, dropping 5% on optimism that the U.S. is set to slow the pace of its rate hikes, likely resulting in a soft landing for the U.S. economy.

However, sentiment is changing, and the dollar is receiving a bid again as traders factor in the growing threat of recession, primarily in the U.S.

JPMorgan Chase CEO Jamie Dimon summed up these concerns in an interview with CNBC on Tuesday, saying that spending from the pandemic stimulus programs is still propping up the U.S. economy.

Consumers still have $1.5 trillion in excess savings from these programs, but that “will run out sometime mid-year next year,” Dimon said. “When you’re looking out forward, those things may very well derail the economy and cause a mild or hard recession that people worry about.”

fell 0.1% to 1.0455, helped to a degree by falling 0.1% in October, less than the expected 0.6% decrease.

The meets next week and is widely expected to increase interest rates again to try and contain , having raised rates by a combined 200 basis points since July.

That said, ECB policymaker Constantinos Herodotou said on Tuesday that the bank’s interest rates are now “very near” their neutral level.

slipped 0.1% to 1.2130 after fell at the sharpest pace in 14 years in November, dropping 2.3%, according to data from mortgage lender Halifax.

The has regularly increased interest rates this year to try and contain rising at double digits, hitting discretionary spending in the country.

rose 0.3% to 137.46, rose 0.1% to 0.6695, while fell 0.2% to 6.9828 after Chinese authorities announced the further relaxation of a number of COVID mobility curbs.

This overshadowed the release of data earlier Wednesday which showed the country’s was in its worst state since 2020 when trade was hit by the first COVID lockdown.

Leave a Reply

Your email address will not be published. Required fields are marked *

Risk Warning: The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory or other services by AdonFinance. In addition, the content of the website offers no opinion with respect to the suitability of any security or any specific investment. Trading foreign exchange, stocks, cryptocurrencies and commodities is potentially high risk and may not be suitable for all investors. The high level of leverage can work both for and against traders. Before any investment with any broker you need to carefully consider your targets, previous experience, and risk level. Forex trading can result in the loss of your money, as a result, you are expressly cautioned that you should never invest or trade with money that you cannot afford to lose. For the avoidance of doubt, AdonFinance's service provides Brokers reviews in the Financial market. AdonFinance, its subsidiaries, agents or affiliates will assume no responsibility whatsoever for your trading activity. © Copyright 2021 AdonFinance