The dollar index (DXY00) is down by -0.60% and fell to a 2-week low. The dollar remains under pressure after Moody’s Ratings late last Friday downgraded the US government’s credit rating from Aaa to Aa1, citing a ballooning budget deficit and fiscal concerns. The downgrade puts the dollar’s status as a global reserve currency into question and may prompt some investors to lighten up on their dollar assets. Also, worries about rising US budget deficits are undercutting the dollar, with legislators discussing a tax-cut package. Higher T-note yields today are limiting losses in the dollar.
The markets are discounting the chances at 2% for a -25 bp rate cut after the June 17-18 FOMC meeting.
