US Dollar witnesses further drop amid weak labor market figures

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The US Dollar, represented by the DXY Index, has extended its decline, weighed down by soft labor market figures falling below 105.00 on Friday.

US Dollar extends its downward trend after ending last week with 0.85% loss. NFPs highlight was an unexpected rise in Unemployment. Markets are now seeing two cuts in 2024. Amid growing signals of disinflation in the US economy, there is growing confidence in a September rate cut. However, Federal Reserve officials continue to refrain from immediate rate cuts, maintaining a data-dependent approach, but have started to acknowledge labor market struggles.

It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

 

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