January 3rd 2006
Dollar records biggest daily loss in 4 years
On the first day of trading in 2006, the USD recorded its largest daily loss since September 11, 2001, falling nearly 2% against the Euro. On the first day of trading in 2005, in contrast, the USD rose significantly, as part of a broader trend of appreciation against the world’s major currencies. That the dollar fell in its first 2006 trading session has led many forex analysts to speculate that the year will not be kind to the USD. Specifically, the dollar fell due to a combination of weak economic data and the ‘minutes’ from the last Fed meeting, which suggest the Fed may slow its planned monetary tightening. Many analysts are pointing to the disappointing manufacturing data and the recent flattening of the Treasury yield curve as evidence that the US economy is faltering and will soon plunge into recession, leading the Fed to stop raising interest rates. Daily FX reports:
The FOMC minutes released today reflected the varying views on the degree of future rate hikes. Additional increases “probably would not be large” and “members thought that the policy outlook was becoming considerably less certain.”
Read More: Dollar Sees Largest One Day Slide in 4 Years
