When Dollar climbed up
Wojciech R. Bolanowski, MD PhD
Chief AI Officer, retail and digital banking, payments and fintech in EU, GCC, SEA, enthusiast of cross-border banking
From May 24th to June 24th US Dollar strengthened
Last month was a month of strong US Dollar. Uniformly, all monitored asset from my basket (Euro, Bitcoin, Polish Złoty, gold, and Israeli Shekel) weakened in relation to American currency. The fall varied depending on the asset. Gold performed the best and lost only 0.1%. For the whole month it is nothing but a virtual loss. On the contrary, Bitcoin fell by almost 7%. The difference between the traditional and digital asset was striking. The three currencies performed somewhere between gold and Bitcoin. Out of them Euro was the strongest, the niche currencies, Shekel and Złoty, showed the similar loss, 2.6 and 2.1%, respectively. The table below shows the exact performance of the chosen assets between May 24th and June 24th, 2024.
Change of Gold, Euro, Bitcoin, Shekel and Złoty price in USD last month. Gold performed the best, Euro was the strongest currency asset, Bitcoin felt by almost 7%. The chart showing relative change of the average market price of EUR and PLN (in USD); data source: xe.com
What people said about rising dollar
Generally, it is Federal Reserve policies said to be behind strong dollar recently. Namely, investors’ hopes for delayed rate cut grew last month and with those hopes the price of dollar went up. Additionally, the potential political risk of hastily announced general election in France weaken many continental currencies including the two from my monitored basket (Euro and Polish Złoty). The very tiny decline in the price of gold supports narrative that strengthening of dollar is driven as much by Fed unwillingness to cut the rates as by looking for safe investments by concerned investors. The similar performance of Shekel and Złoty, with no disrupting news from Gaza or Ukraine war theatres, would also suggest investors evacuation from smaller, hence more risky markets in favor of America. The sense of higher risk impacted cryptocurrencies as well. For few years June have been a month with the year minimum for Bitcoin and it happens, arguably, this year, too. Cryptocurrency experts identified many signal for bearish sentiment toward Bitcoin last month despite its temporal surge over $70,000 level in the first week of month.
More sophisticated opinions on the strong dollar and weak Bitcoin found on the internet:
Only Euro and Shekel are under the pre-war times
Consequently, all assets worsen their average performance measured from February 2022, the moment of full scale Ukraine war began with Russian invasion. Since then I’ve been monitoring the chosen basket of assets on monthly basis, exactly at 00:00 am, at 24th day of each month. Out of five, three assets stays positive: Bitcoin, gold, and Polish Złoty, although the latter is only slightly more expensive than in February 2022 (0.24% up). Euro and Shekel are still under their prewar levels. Interestingly, those currencies have never raised over those levels and have been in the negative zone for all the time, as they are now. Shekel is more than twice as bad as Euro with the fall -13,8% comparing to -5,5%. Despite the recent loss Bitcoin leads the pack with its awesome 70% value gain during the last 28 months.
Gold, Euro, Bitcoin, Shekel and Złoty price for last 28 months. The chart showing relative change of the average market price in USD; data source: xe.com
June 25th bump and what will come next?
Monthly monitoring is prone to ignore the dynamic, temporal changes of the asset price. The more volatile asset, the more likely it could happen. Indeed, just after June 24th markets recorded the significant weakening of US Dollar. It was interpreted as the result of increased faith for future rate cuts in US. All assets in the basket, except Bitcoin, jumped up between June 23rd and 25th. Again, Złoty and Shekel performed in a similar way, gaining 1.1% and 0.9%, respectively. Gold ad Euro increased by ca. 0.4% over two days. Bitcoin lost over 6% reaching the minim of $59,000 on the night of June 24-25. What will happen next is unclear. Is the latest slide of US Dollar a temporal stop on its way to new heights or a sign of a complete trend turnover? Is Bitcoin in the continous, long term fall or will it bounce back from the resistance level soon? Probably the next check point, on July 24th, 2024, will bring more clarity on these issues.
Change of Gold, Euro, Bitcoin, Shekel and Złoty price in USD between June 23rd and 25th. The chart showing relative change of the average market price of EUR and PLN (in USD); data source: xe.com
Other posts of the series:
Summary of May 24th; 2024:
Summary of April 24th; 2024:
Summary of March 24th; 2024:
Summary of February 24th; 2024:
Summary of January 24th; 2024:
Summary of December 24th; 2023:
Summary of November 24th; 2023:
Summary of October 24th; 2023:
Summary of September 24th; 2023:
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Summary of August 24th; 2023:
Summary of July 24th; 2023:
Summary of June 24th; 2023:
Summary of May 24th; 2023:
Summary of April 24th; 2023:
Summary of March 24th; 2023:
Summary of Fabruary 24th; 2023:
Summary of January 24th ; 2023:
Summary of December 24th:
Summary of November 24th:
Summary of October 24th:
Summary of September 24th:
Summary of August 24th:
Summary of July 24th:
Summary of June 24th:
Summary of May 24th:
Summary of April 24th:
Summary of March 24th: