US dollar is falling against a number of currencies following the PBoC’s decision to decrease the value of the Yuan.
The US Dollar (USD) is losing ground against major currencies. On Tuesday after the People’s Bank of China (PBoC) set the USD/CNY rate higher than expected. This generated a wave of pressure on the US dollar, especially versus the Canadian dollar. Which is currently trading at 1.3125, a six-month low. The Polish Zloty, Japanese Yen, Euro, Pound Sterling. And Scandinavian currencies are all trading higher versus the US Dollar.
Tuesday’s economic figures might signal a change. At 12:30 GMT. Durable Goods Orders data will be released, with investors expecting stasis or losses on all fronts. The Conference Board’s Consumer Confidence Index for June is predicted to improve from 102.30 to 104.00, helping to enhance sentiment in the US Dollar.
What is the relationship between the USD and the US stock market?
Stock markets in the United States are expected to fall if the Federal Reserve begins a tightening cycle to combat rising inflation. Higher interest rates will raise the cost of borrowing and have a negative impact on company investment.
In that case, investors are unlikely to take on high-risk, high-reward positions. Because of risk aversion With monetary policy tightening. The US Dollar Index (DXY) should climb while the broad S&P 500 Index falls, indicating an adverse link.
Investors are prone to gamble on assets that are believed to offer better returns during periods of monetary loosening via lower interest rates and quantitative easing to boost economic activity, such as shares of technology companies. The Nasdaq Composite, a technology-heavy index, is likely to beat other major market indices during this time. The US Dollar Index, on the other hand, is expected to fall due to increased money supply and diminishing safe-haven demand.
