The greenback continues to plummet, while the dollar index reached its lowest slip in two years at 0.52%, settling at 93.276. The US’ trading partners enjoy their time against a weak dollar, as the Fed retains its dovish monetary policy.
The EU’s common currency, the euro, hit a two-year high of a 5% hike. At $1.1807, it garnered its highest rise in 10 years. The Japanese yen traded at 104.97 against a dollar, while pound sterling also rose to $1.2998.
The Fed Reserve concluded its two-day meeting with a somewhat expected decision: it settled to leave interest rates at nearly zero. The US GDP sank at a forecasted rate of 35% in the second quarter, leaving the Fed with no other choice but to release more stimulus into the economy. Jay Powell stressed that the US economy would follow the course of the virus, and a slow recovery pace will be expected.
The US economy flattens faster than the pandemic curve. There were average daily cases of 65,000, and the mortality rate is averaging at 1,000 per day. This eliminates economists’ initial hope for a V-shaped recovery where a strong rebound will follow the sharp economic decline.
Goldman Sachs Warning
Investors have doubts about the United States’ ability to give the highest return for their investments among other countries.
Goldman Sachs, a leading global investment and banking firm, cited the inability of the USD’s power to remain relevant. It warned that the USD is on the brink of descending its world reserve currency status — a throne it has held since 1944.
The fear of governments debasing their fiat currencies as the Federal Reserve continues their money supplements arises. The United States’ debt level surpassed 80% of its economic output amidst political turmoil and a heated US-Sino trade war.
On the other hand, gold’s price hit an all-time high at $1,931 an ounce on Monday. Analysts forecast that it may reach the $2300 an ounce price mark in the next 12 months.
Similarly, Bitcoin crossed the $11K threshold during the week. It currently trades at $10,798. Cryptocurrency trade has risen by 54% since the beginning of 2020, putting the USD in a more difficult situation.
