Investing.com – The U.S. dollar fell sharply on Monday on concerns about U.S. economic growth, with the Swiss franc and Japanese yen seeing sturdy demand for safe-haven assets.

As of 08:45 ET (12:45 GMT), the dollar index, which tracks the U.S. currency against a basket of six other currencies, was down 0.9% at 102,100, its lowest level since the start of the year.

Dollar weaker on recession fears

The dollar sell-off came after data released Friday showed a keen decline in U.S. jobs created in July, and U.S. Treasury yields fell sharply as investors began to factor in a strenuous landing for the U.S. economy amid a prolonged period of elevated interest rates.

Traders now expect the United States to cut interest rates in September and expect cuts more significant than the roughly 50 basis points previously expected this year.

Wells Fargo, for example, is currently forecasting two 50 basis point interest rate cuts at the Federal Open Market Committee meetings in September and November.

This forecast represents a significant change from previous forecasts due to emerging economic indicators; recent data raises concerns about the state of the economy.

“Importantly for the dollar, fears of a US recession mean the market no longer expects an orderly adjustment in Fed policy towards some neutral interest rate – say around 3.25%,” ING analysts said in a note. “No, fears of a recession are now introducing the idea of ​​a stimulus.”

Swiss franc in demand as carry trades end

In Europe, the Swiss franc rose sharply as investors sought some form of security in these turbulent times.

The franc rose to a seven-month high against the dollar, falling 1.4% to 0.8458.

The Swiss currency also benefited from an exit from carry trades, in which investors borrow money from low-interest-rate economies such as Japan or Switzerland to fund investments in higher-yielding assets elsewhere, which have been popular in recent years.

rose 0.6% to 1.0974, on a generally weaker dollar.

Expectations of further interest rate cuts have also risen, but very few traders have taken long positions on the euro since the political unrest in France began in tardy June.

“Weaker global growth is not good for the pro-cyclical euro, but the fact that the ‘US exceptionalism’ narrative could come back to earth with a vengeance should be positive for EUR/USD – assuming the Fed is prepared to cut rates sharply,” ING added.

fell 0.4% to 1.2752, amid concerns it could fall behind since the UK central bank only cut interest rates last week.

Even then, policymakers were split 5-4 on the decision to cut rates by a quarter of a percentage point to 5%, suggesting the central bank would continue to tread carefully.

Yen hits seven-month high

In Asia, the yen fell 3.2% to 141.86, with the yen rising to a seven-month high against the dollar as investors aggressively exited carry trades in anticipation of a significant rate cut by the Federal Reserve.

The yen’s recovery, which hit a 38-year low against the dollar in July, was also helped by a 15 basis point interest rate hike by the Bank of Japan last week.

“It is hard to deny that USD/JPY will extend this correction into the 140 area, which we identified as an outside risk last week,” ING said.

fell 0.6% to 7.1167, with the yuan strengthening on the weakness of the U.S. dollar despite concerns about an economic slowdown in China.