According to Jinshi, an indicator measuring the strength of the US dollar rose to its highest level since November last year as the market seemed to see no hope that the Federal Reserve would start cutting interest rates. The Bloomberg Dollar Spot Index rose 0.4% to 1,271.36 on Wednesday, hitting a new high for the year. The dollar has continued to rise in 2024 as the Fed's policy of maintaining high interest rates for a longer period of time has created a huge interest rate gap between the United States and other major economies.
The yen fell to its lowest level since 1986, raising the risk of another intervention by Japanese authorities, which have kept interest rates at extremely low levels. While the European Central Bank and the Bank of Canada began their monetary easing cycles in early June, the Federal Reserve has kept interest rates at their highest level in more than 20 years. For analysts at JPMorgan Asset Management, the dollar will continue to benefit as long as the Fed keeps borrowing costs high relative to other central banks. However, they also warned that this support may taper off at some point.