Dollar on Course for Worst Month in Decade…
The dollar is on track to close out its worst month since April 2011 as a rise in coronavirus infections across the U.S. threatens to damp the economic recovery and keep low interest rates in place for longer.
The ICE U.S. Dollar Index, which measures the greenback against a basket of other currencies, weakened 0.6% Monday to its lowest level since September 2018, according to FactSet.
Investors have sold the dollar and bought currencies of countries with lower infection levels in recent weeks. That has erased 3.7% of the currency’s value in July, putting it on track for its worst one-month performance in over nine years.
The recent surge in cases in parts of the U.S. has prompted local authorities to halt or rewind plans to let business activity resume, raising doubts about the prospects for the economy. California, Texas and Florida, which are among the hardest-hit states, together account for more than a quarter of U.S. gross domestic product.
Gold Rips Up Record Book as $2,000 Test Looms
(Bloomberg) — Gold’s unrelenting march higher shows no signs of slowing after a plunge in the dollar swept prices past the previous high set in 2011 and put the metal on track for even bigger gains.
Bullion’s surge came as a gauge of the U.S. currency sank to the lowest in more than a year, the latest in a long line of bullish factors — including negative real rates in the U.S. and bets the Federal Reserve will keep policy accommodative when it meets this week — that are pushing prices ever higher.
With the world facing an extended period of unprecedented economic and political turmoil, gold’s now got $2,000 in its sights. Some in the market suggest the haven could rise even beyond that.
Nascent signs of gold’s record-breaking ascent began to show in mid-2019, when the Fed signaled a readiness to cut interest rates as uncertainty — primarily about the impact of the U.S.’s trade battles — clouded its outlook. The rally gathered pace in early 2020 as geopolitical tensions rose and the coronavirus outbreak hurt growth worldwide, pushing governments and central banks to unleash vast amounts of stimulus, and sending real interest rates slumping further into negative territory.
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