Dollar weakens again as economic data improves around the globe
The dollar is falling back toward its March lows, moving lower against all six of the world's major currencies on Tuesday. The decline has been spurred by rising stock markets around the globe, which have unwound the dollar's safe-haven appeal.
What's happening: Improving data in Europe and the U.S. have bolstered risk-on sentiment.
- Manufacturing and service sector activity improved in Germany and France and in the eurozone overall, as the bloc saw its composite flash purchasing managers index jump to 47.5 from last month's reading of 31.9.
- U.S. PMI also beat expectations, as did a reading on new home sales and the Richmond Fed's manufacturing index
- The euro rose comfortably above $1.13 and is nearing its 2020 high.
Yes, but: The dollar also fell to its lowest in six weeks against the Japanese yen, suggesting the greenback's weakness is broad-based and not entirely due to improving risk appetite. (Investors typically sell the yen when risk appetite increases, making the dollar's recent weakness against the currency unusual.)
- Analysts say the Fed's extreme monetary policy actions since March — taking U.S. interest rates to 0 and making it the central bank with the world's biggest balance sheet — could mean the dollar continues to weaken.
Watch this space: The decline in the dollar and uptick in coronavirus cases helped gold rise to its highest level since October 2012, breaking out of a range it has held in since April.
Go deeper ... Yale economist: Dollar will fall 35% "sooner rather than later"