Dollar extends losses to 2-week low as US bond yields fall

US dollar fell on the European market on Friday against a basket of global currencies to extend its losses for a third consecutive day, hitting a two-week low as 10-year US bond yields fell to their lowest level since late 2016, especially as the Federal Reserve is likely to cut interest rates once or twice this year to face global and local risks.

The dollar index fell more than 0.1% to 96.50 points, the lowest since June 7, from the opening level of 96.62 points, with the highest at 96.71 points.

Yesterday, the index lost 0.6%, the second consecutive daily loss, as the US currency continued to sell against most major and minor currencies after the Federal Reserve meeting.

US 10-year Treasury yields fell to 1.9740%, the lowest level since November 2016, and lower bond yields reduce the attractiveness of investment in the US dollar.

Over the course of the week, the dollar index fell more than 0.9%, the second weekly loss in the last three weeks, as the Federal Reserve is likely to cut interest rates this year.

The Federal Reserve kept its benchmark interest rate unchanged at 2.4 percent for the fourth consecutive session, in line with most of the financial market expectations.

The US central bank said the interest rate cuts issue is on the rise, boosting the possibility of a monetary policy easing at the next month meeting, to help the bank to combat growing global and domestic risks.

The global threat is the US trade wars with several countries, especially China, and domestic risks which are based on the rising fears about weak inflation levels in the country.

The Federal Reserve dropped the word "patient" when changing interest rates from the monetary policy statement, and stressed that it will take what is necessary to maintain economic growth in the country, and showed that about a half of its members are ready to reduce borrowing costs in the next few months.

Federal Reserve Chairman Jerome Powell said some of central bank's officials believe the issue of easing monetary policy has been more appropriate in recent times.

Powell confirmed his intention to spend his full four-year term in response to reports that US President Donald Trump was trying to oust him from the presidency of the Federal Reserve.

The Federal Reserve has lowered its forecast for the pace of inflation in the United States to 1.5% this year from 1.8% on average in March, and also forecasted that inflation would not reach the target of 2% next year.

After the end of this important meeting, the main question in the financial markets is no longer whether or not the Fed will cut interest rates next July, but whether the cut will be 25 or 50 basis points ?