The USD Dollar Index was down almost five percent at the end of July, which is the worst drop since 2010. The global market is showing signs of ever-increasing doubt that the US dollar should be the de facto reserve currency in the finance world.
The USD slumped downward to rest on two-year lows as of Friday the 31st of July, and is shaping up to post its largest monthly decline in a decade. Investors and speculators seem concerned that the recovery of the U.S. economy will neither be rapid or even assured amidst the worsening of the Coronavirus epidemic in that country.
U.S. President Donald Trump further diminished global investor confidence in the Greenback after he floated the possibility of delaying the nation’s election this coming November.
The dollar index slipped down to 92.59, a level seen last in mid 2018, and is on track to log the steepest monthly retraction since late 2010.
The sudden increase in Coronavirus cases that occurred in mind-June of this year had a significant impact on consumer spending, sending the economy further away from recovery and reinforcing the negative growth that has been the default for most of 2020.
US GDP data has reinforced the above consumer sentiment, showing a significant contraction of nearly 33%. This is the most significant quarterly retraction since the Great Depression.
Unemployment benefit claims have increased significantly, with a seasonally adjusted 1.43 million shown by the end of July, showing that the jobs market is stalling in a significant manner.
Conversely, competing currencies seem to be enjoying the fallout of the USD, with the EURO, YEN and GBP seeing very healthy levels in comparison.
There may be a new contender for the de facto global reserve currency.