Dollar Nears Its Lowest Level in 2024 and All Eyes Are On Powell

Lebanese Forex Market

The Nominal Effective Exchange Rate (NEER) of the Lebanese pound strengthened against a basket of 21 influential currencies, including the US Dollar and Euro, by 0.2% on a weekly basis to stand at 229.88 points on August 16^th, 2024. The Lebanese Pound’s value appreciation is due to the decline of several currencies like the Russian Ruble and the Turkish Lira against the US Dollar, as the US Dollar has been equivalent to 89,500 Lebanese Pound since January 24, 2024. Since the start of the year, we notice that the NEER Index fell by 4.57% as the US Dollar touched its lowest level this year earlier this week.

International Forex Market

In international currency markets, the US Dollar index, a measure of the US currency’s strength against a basket of six rivals, hit its lowest level in 2024 last Tuesday. The move came after the U.S. government revised down the number of jobs added in the 12 months to March 2024 by 818,000 fewer jobs. The revised data raised worries about a potential recession in the world’s biggest economy, which will negatively affect its currency.

The US Dollar calmed today ahead of Federal Reserve Chair Jerome Powell’s speech at a central bank event in Jackson Hole later Friday (today) that may give hints on when and by how much the Fed could cut interest rate.

The Japanese Yen, which weakened to historic lows recently, reversed its course on Wednesday and increased by half a percentage point after BOJ Governor Kazuo Ueda left the door open for future BOJ rate hikes.

The euro rose against the US Dollar this week by 0.9% to 1.11, just below the 13-month high it touched on Wednesday, while sterling hit its 13 month high against the US Dollar as UK private sector activity grew more than expected growth in August and at its fastest pace in four months.

Commodities

In commodity markets, Gold price fell this week from its highest level ever, as the U.S. dollar compensated for some of its losses ahead of Powell’s speech.

As for oil markets, both oil benchmarks hit their lowest level since early January earlier this week. These moves resulted from the latest U.S. jobs’ downward data revision which might lead to a recession and hurt oil demand globally, and from the continued push for a ceasefire in Gaza which eased supply worries, in addition to concerns about demand in China, the world’s largest oil importer. The decrease was significant despite expectations that the U.S. Federal Reserve will cut interest rates in its next meeting, which helped ease some concerns about the economic outlook of the top oil consumer country.

Brent crude, the global oil benchmark, fell 3% in the last week to $77.27 a barrel and West Texas Intermediate, the US equivalent, slipped 4.66% during the same period to $73.08 a barrel.

These concerns raise the question about whether in the next few weeks, OPEC⁺ will proceed with its planned production increases from October, or whether it will postpone this action.

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