Economy Update
The US dollar has experienced a decrease, nearing its lowest level in 11 weeks against major currencies during early trading. This decline is attributed to reduced returns on short-term US Treasury bonds following a string of disappointing economic data.
The yen, perceived as a safe haven, has risen to its highest level since October amid a decline in investor confidence, particularly in light of potential new customs duties from the Trump administration.
Similarly, the Canadian dollar has stabilized around its lowest point in two weeks, facing additional pressures heading into the next week.
According to Tabas Strickland, head of the market economy department at the National Bank of Australia, “The flow of American data is now disappointing, which raises questions about the narrative of the exceptional state of the US economy that had previously supported the dollar.”
Strickland further noted, “The uncertainty in commercial policy is definitely affecting sentiment,” which undermines currencies linked to basic commodities while bolstering those considered safe havens.
The dollar index, which tracks the performance of the currency against six major competitors, fell by 0.1 percent to 106.17 during Asian trading, inching closer to Monday’s low of 106.13—the weakest level recorded since December 10.
The previous day, the American Conference Board reported a seven-point decline in the consumer confidence index, now at 98.3 points. This marks the largest drop since August 2021, falling short of economists’ estimates of 102.5 points.
This downturn adds to a collection of weak data, intensifying expectations for two potential quarter-point reductions in US interest rates this year, with the first reduction likely in July, based on market estimates.
The yield on two-year US Treasury bonds dipped to 4.086 percent on Wednesday, trending toward its lowest point of 4.074 percent reached the previous day, a level unseen since November 1.
US Treasury Secretary Scott Bessent remarked on Tuesday that the economy appears more fragile than suggested by traditional economic indicators, attributing this perception to fluctuating interest rates, persistent inflation, and a job market increasingly reliant on the government sector. He also emphasized the significance of customs tariffs as a vital revenue source.
