The US Dollar is Staying Strong
Audio version available here (1 min. 30 sec.)
In the face of all the economic worries plaguing America in the past couple of months, one thing has stood strong: the US dollar. Though it temporarily stumbled in anticipation of the Federal Reserve’s incredible interest rate slash in September. The dollar has been remarkably resilient. Here’s its journey the last few months, and what economists predict will happen in the upcoming ones.
Since August, America has waited with anxiety for a potential recession to hit the economy. With unemployment taking a sudden dip, triggering the Sahm rule, and the US Treasury Yield repeating a rarely-seen behavior it previously exhibited just before the 2001 recession, confidence in the US economy took a nosedive. Luckily, the Federal Reserve came in amid all this fear and lowered interest rates for the first time since 2020, and by a whopping half percentage point.
Interestingly, just ahead of the Fed’s announcement that it’d taken this course of action, the US dollar weakened, losing “almost all [its] near-5% gains against a basket of major currencies”. However, this poor performance has now turned around, and experts anticipate it will continue to be resilient despite further rate cuts coming later this year. This is further supported by the Fed’s Jerome Powell “saying policymakers were not ‘in a hurry’ to cut rates”, meaning that the next interest rate cut will likely be by just a quarter point rather than half a point.
While the dollar not continuing to weaken is good news for business owners, you should not grow complacent. Confidence in the overall economy is still shaky, and there are analysts who predict the dollar to trade weaker for the rest of the year. Because of this, you shouldn’t abandon your contingency plan for a potential economic downturn. If you don’t have one, we highly recommend meeting with a business or financial advisor so your business can be prepared for anything. For the right guidance, reach out to our experts at XQ CPA. We’d love to help you.
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