Soft US economy weighs on dollar

Published: 29 Apr at 9 AM Tags: Euro, Dollar,

The dollar index, an indication of how the greenback is faring against a basket of other currencies, has hit its lowest level in two months. Investors are keenly watching the outcome of a policy meeting at the Federal Reserve.

The dollar has been suffering because it now looks unlikely that the US central bank will hike interest rates any time soon.

The dollar index dropped as low as 96.011, its lowest level since 5 March, before recovering a tad to 96.088. The current weakness in the US economy has been blamed on various factors including a previously strong US currency, a harsh winter and West Coast ports disruption.

A weaker dollar has been good news for the euro. The single currency has hit $1.0976, not far off $1.1000, a level not topped for more than three weeks. Sterling has also done well and is trading at $1.5344, its highest level in two months. The Canadian dollar is also at a three-month high.

The dollar also dropped against the yen to 118.77. However, the biggest winner is the Australian dollar. Earlier in the month the Aussie was as low as $0.7534 but has managed to climb back above 80 cents, the first time it has done so since the beginning of the year.