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The weakened dollar falls to lows of more than two years before the Fed


The dollar has hit a two-year low this Wednesday, before the monetary policy decision of the US Federal Reserve (Fed) is known July, in an environment of weakness for the 'green ticket', due to the advance of the coronavirus in the US and the signs of stagnation of the economic recovery that the US economy has sent. The massive stimuli from the central bank also keep the currency at low hours whose benchmark index, which measures its performance against six currencies, it has fallen to 93.39, its lowest level since June 2018. The euro, meanwhile, has set a new high of more than 22 months at $ 1.1790.

The US Covid deaths approach 150,000 on Wednesday, the highest level in the world, after an increase of 10,000 deaths in 11 days, according to a Reuters count.

Also this Wednesday, the Fed is expected to affirm its commitment to keep interest rates close to zero for years, with investors focused on whether the US central bank will also indicate greater tolerance for inflation in the future.

Expectations that the Fed will allow inflation to rise higher than expected before normalizing interest rates has helped send real yields to near-record lows and is also raising fears that the dollar's role as a reserve currency could be harmed.

"The currency markets will focus on determining if there is a sign that the central bank will tolerate higher inflation, since this could affect the real yields and, therefore, to the dollar ", alert the analysts of Action Economics in a report.

Real 10-year Treasury yields, reflecting yields after expected inflation, have fallen to -0.93%.

As for the other currencies, the euro has exceeded its 22-month high on Monday and has approached $ 1.18, the Australian dollar has reached a maximum of 15 months and the pound continues to trend upward, heading towards 1 ,30 dollars.

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