US Dollar Gains on Soft IMF Forecast
The US Dollar made gains in the early North American trading session, following a weak IMF forecast.
The IMF forecast also indicated that weaker growth may well leave the worldwide economy more vulnerable to large shocks such as an unexpected currency depreciation or geopolitical conflicts. This year we have seen surprise devaluations of the Chinese Yuan as fears of slowing growth in China, the world’s second largest economy, accounted for a lot of diminishing risk sentiment amongst the global trading community.
In the latest World Economic Outlook, the IMF said that it now saw the global economy expanding by only 3.2 percent in 2016, which is 0.2 percentage points lower than its January forecast. The IMF forecast is down another 0.4 percentage points lower than its October 2015 estimate and 0.6 percent points lower than its forecast from July of last year.
The US Dollar Index which measures the greenback against a basket of six weighted currencies, rose from an eight month low, after the International Monetary Fund reduced its global growth forecast for the fourth time in the last 12 months. The news boosted safe-haven investments including the US Dollar and Silver.
The US Dollar also made strong gains in nearly all of its major pairings as investors looked for safety in their investments.
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