Dollar Depreciation: A New Low Amid Economic Shifts

The dollar has hit a three-and-a-half-year low against the euro as traders anticipate the Federal Reserve will cut interest rates. Reports show U.S. consumer spending fell, the unemployment rate rose, and potential changes in Fed leadership further impact the currency's strength.

The value of the dollar plunged to a three-and-a-half-year low against the euro on Friday, influenced by expectations that the Federal Reserve will implement more rate cuts sooner than anticipated. Recent data indicating a fragile U.S. economy has fueled trader speculation.

U.S. consumer spending unexpectedly dropped in May, fueled by the diminishing impact of pre-emptive product purchases like motor vehicles. Additionally, unemployment claims hit their highest level since 2021, and a significant downgrade in consumer spending was reported for Q1 GDP figures.

Fed Chair Jerome Powell's recent statements to Congress suggested rate cuts are likely if inflation remains subdued. Rumors regarding President Trump's potential appointment of a new Fed Chair, in place of Powell, have further weakened the dollar's position.

(With inputs from agencies.)