Investing.com Reports: US Dollar Drops Below 102 Due to Clear Signs of Recession

By Peter Nurse

Investing.com Updated at 17:00 GMT

The US dollar index fell to 101.860, down by 0.30%, after the index rose strongly during this morning following the OPEC decision that warned that the Fed will have to raise rates for a longer period.

And it was issued, which indicated the most violent decline in 21 months, since 2020. This is an indication of the contraction of the US economy, affected by the recent tightening of the Federal Reserve.

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Update at 11:45 GMT:

The dollar index turned to a loss after rising hours ago, and it now records 102.055 against a basket of foreign currencies, down by 0.13%. At the same time, gold reversed its positive direction to the upside, and gold contracts approached the $2000 level again, and gold contracts are now trading at $1992.75. An ounce, up by 0.32%, while spot contracts recorded $1,975.53, up by 0.33%.

dollars this morning

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dollar index now

The US dollar index rose 0.24% to 102.433 against a basket of foreign currencies, at a time when US Treasury bond yields rebounded, and the 10-year Treasury bond yield recorded 3.543%, an increase of 1.52%.

The index fell 1.8% in March, pressured by concerns that unrest in the banking sector would hurt economic activity, prompting to stop the monetary tightening cycle earlier than previously expected.

That view has been given a degree of credence after data on Friday showed that ecl-914 rose only moderately in February after rising in the previous month, showing Inflation some signs of calming.

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How did OPEC change the course of the dollar?

However, the sudden decision on Sunday by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to cut production again by just over 1 million barrels per day sent oil prices soaring, changing the narrative.

“Since inflation is likely to remain the largest driver of the Fed’s monetary policy, the market is unlikely to assume an early shift to lower rates or a faster pace of cutting,” said Hidehiro Goke, strategist at Mizuho Securities.

The Fed Watch tool from Investing.com revealed a strong tendency to raise interest rates at the next Fed meeting, after OPEC’s decision to cut production and stimulate oil prices to rise.

58.8% of investors and experts now believe that the Fed will accept a rate hike in the next May meeting, while the percentage of those who expect a fixation declined to 41.2%, down from 51.6% yesterday and 83.2% in the previous week.

Dollar and foreign currencies

It traded 0.2% lower at 1.0812, after earlier touching a one-week low of 1.0788 as the dollar rose, while it fell 0.2% to 1.2306.

Economic data due for release later in the session includes manufacturing PMI numbers for and . These are expected to show that this important sector remained in contraction in March.

It rose 0.6% to 133.62 after rising {{ecl-202 || The Japanese manufacturing PMI rose to 49.2 in March from 47.7 in February, its slowest contraction since November 2022.

However, the yen was affected by a rally in US bond yields in the wake of the OPEC+ decision, with the two-year yield, which usually moves with interest rate expectations, rising 4.8 basis points at 4.110%.

It also rose 0.3% to 6.8884 after data showed growth in China’s manufacturing sector slowed in March, with {{ecl-753 || The Caixin PMI fell to 50, down from an eight-month high of 51.6 in February.

This is consistent with government data last week which showed that growth in China’s manufacturing sector was slowing after an initial bounce back after the Covid crisis.