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Dollar on course for worst month in decade as U.S. recovery loses steam

By Administrator_India

Capital Sands

The dollar slipped to two-year lows on Friday and is on track to post its biggest monthly decline in 10 years, as investors worried that a recovery in the U.S. economy could be stymied by a second wave of coronavirus.

Confidence in the U.S. currency was undermined further after U.S. President Donald Trump raised the possibility of delaying the nation’s November presidential election.

The dollar index fell to 92.777 , and is on course to post its biggest monthly fall in 10 years.

The U.S. Labor Department data showed initial claims for unemployment benefits increased 12,000 to a seasonally adjusted 1.434 million in the week ending July 25, a sign that recovery in the employment market is stalling.

That poured cold water on hopes of recovery after a devastating recession in the previous quarter. Data on Thursday showed that the U.S. economy contracted by 32.9% in the second quarter, the steepest pace since the Great Depression.

The U.S. Congress was no closer to a deal extending or replacing the extra $600-per-week in payments to tens of millions thrown out of work by the coronavirus pandemic, just one day before a federal jobless benefit was set to expire.

Adding salt to the dollar’s injury, Trump raised the idea of delaying the Nov. 3 U.S. elections, although it was immediately rejected by both Democrats and his fellow Republicans in Congress – the sole branch of government with the authority to make such a change.

Leading the charge against the dollar was the euro, which has gained traction after European Union leaders agreed this month to a 750 billion euro economic recovery fund, taking on debt jointly in a major boost to regional cooperation.

The euro hit a two-year high of $1.1889 and last traded at $1.1869, having gained 5.7% so far in July, also the biggest gain in a decade.

Against the yen, the dollar hit a 4 1/2-month low of 104.52 yen and last stood at 104.54 , having lost 3.1% this month.

Likewise the British pound stood at $1.3119 after hitting a 4 1/2-month high of $1.3136.

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