The US dollar suffers the highest weekly losses in 4 months!

The US dollar recorded strong losses during the trading week ending November 17, amounting to about 1.88%, which is the strongest weekly losses incurred by the green currency in 17 weeks, affected by the growing possibility of the end of the federal monetary tightening cycle in addition to the strong decline in US Treasury bond yields, as the dollar was exposed to pressure. Strong selling led it to abandon the 104 point level and trade below it at the end of the week’s trading.

In the following lines, we review how these factors contributed to enhancing the dollar’s ​​weekly losses:

1. Negative US inflation data

Official US data showed that inflation witnessed a noticeable slowdown and was stronger than market expectations during last October, as annual inflation recorded the equivalent of 3.2%, less than market expectations that inflation would slow to only 3.3%, noting that the consumer price index stabilized at 3.7% in the month. Last September, the data also revealed that the annual core US inflation rate (which excludes energy and food prices) also slowed to record 4.0%, while market expectations were likely to stabilize at the same level that inflation recorded at the end of last September at 4.1%.

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The negative data contributed to strengthening the downward momentum of the dollar’s ​​performance during the ending week, as these data raised market expectations about the US Federal Reserve ending its tightening approach and not raising interest rates again at its upcoming meetings, in response to the slowdown in inflation in the country, and then the dollar was clearly damaged during trading. last week.

2. The strong decline in US Treasury bond yields

US Treasury bond yields of various terms fell sharply during this week’s trading, indicating traders’ reluctance to buy the US dollar, which ultimately reinforced the greenback’s decline. Looking at the trading of the week ending, it is clear that the 10-year US Treasury bond yield recorded weekly losses of about 4.58%. The losses in the 20-year US Treasury bond yield amounted to about 3.45%, and the 30-year US Treasury bond yield loss was estimated at 3.65%, which had a negative impact on the dollar’s ​​movements in the last week.

3. Statements of the less stringent members of the US Federal Reserve

Some statements issued by a number of members of the US Federal Reserve on inflation reinforced the dollar’s ​​losses this week. These statements, in their entirety, stated that inflation in the United States is clearly declining, supported by several factors, the most important of which are improved supply chains and increased productivity in the country, which led to an increase in supply in the markets. The statements also touched on the return of commodity inflation to pre-pandemic levels, and that the current position of the US Federal Reserve’s monetary policy is largely good.

These comments have fueled market expectations that inflation in the United States is witnessing a noticeable decline, and the pace of decline in inflation may continue in the coming months, reaching the Federal Reserve’s target of 2%, which will reduce the pressures facing the US Federal Reserve to continue the cycle of raising interest rates. In other words, the bank may keep… The Central Bank set the current interest rate at 5.50% during its upcoming meetings, with the possibility that the Federal Reserve will begin thinking about reducing interest rates in 2024, which has had a negative impact on the dollar’s ​​performance this week.