The dollar is on track to close out its worst month since April 2011 as a rise in coronavirus infections across the U.S. threatens to damp the economic recovery and keep low interest rates in place for longer, The Wall Street Journal reported. The ICE U.S. Dollar Index, which measures the greenback against a basket of other currencies, weakened 0.8% Monday to its lowest level since June 2018, according to FactSet. Investors have sold the dollar and bought currencies of countries with lower infection levels in recent weeks. That has erased 3.8% of the currency’s value in July, putting it on track for its worst one-month performance in over nine years. The recent surge in cases in parts of the U.S. has prompted local authorities to halt or rewind plans to let business activity resume, raising doubts about the prospects for the economy. California, Texas and Florida, which are among the hardest-hit states, together account for more than a quarter of U.S. gross domestic product. New claims for unemployment benefits, which offer a view on the health of the labor market, last week climbed for the first time in four months, suggesting that the recovery may be faltering. Weekly applications, which surpassed six million in the last week of March, had previously fallen as government-support programs and the gradual reopening of economies allowed employers to keep staff on payrolls and bring workers back. Investors are betting that the Federal Reserve will offer a gloomier outlook for the economy following a two-day meeting that ends Wednesday. Fed officials have already warned this month that the economy faces a deeper downturn and more difficult recovery if the country doesn’t take more effective action to slow the spread of the virus. The dollar selloff has been accelerated by the Fed’s decision to slash interest rates to near zero.
