A guage of the dollar is heading for its worst week in over two years as traders turn sour on US exceptionalism, expecting trade policies to slow down growth in the world’s biggest economy.
The Bloomberg Dollar Spot Index fell 2.4%, on path for the biggest weekly decline since November 2022. US job growth steadied last month while the unemployment rate rose, pointing to a softening labor market. That affirmed the case for monetary easing and sent US yields lower, weighing on the greenback.
The tariffs that were imposed and then delayed by President Donald Trump, created uncertainty and cast a shadow over the US economic outlook. That contrasts with the boost in spending plans in Europe, especially Germany, which propelled the euro to its best week since 2009.
“The huge fiscal shift in Germany has boosted growth expectations in the Eurozone and this has come at a time when concerns over the US growth outlook have increased,” said Lee Ferridge, a strategist at State Street.
The European spending plans have elevated currencies in the region. The Swedish krona was the best performer against the greenback in the Group of 10 this week, rising more than 7%, followed by the euro’s nearly 5% gain. The Canadian dollar was lagging behind its peers, weighed down by tariff risks.
In the US, job growth steadied last month while the unemployment rate rose. Traders continue to anticipate three interest-rate cuts from the Federal Reserve over the seven remaining policy meetings this year.
Speculative traders, including hedge funds and asset managers, curbed their bets on dollar gains for the sixth week in a row through Feb. 25, though positioning remains long the greenback, data from the Commodity Futures Trading Commission showed. Traders are the least bullish on the dollar since late October, before the US presidential elections.
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With assistance from Carter Johnson.
