Connect with us

Hi, what are you looking for?

Investing Ideas

Dollar hovers near one-month low, set for worst week since May

Economy45 minutes ago (Jul 30, 2021 09:25AM ET)

(C) Reuters. FILE PHOTO: A trader shows U.S. dollar notes at a currency exchange booth in Karachi, Pakistan December 3, 2018. REUTERS/Akhtar Soomro

By Ritvik Carvalho

LONDON (Reuters) – The dollar traded near a one-month low on Friday and was set for its worst weekly performance since May as dovish remarks by the U.S. Federal Reserve together with underwhelming economic data took the steam out of a month-long rally.

The dollar index, which measures its performance against a basket of six other currencies, was last at 91.845, after hitting 91.775, a level not seen since June 29.

For the week, the index is off 1.1%, its worst weekly showing since early May. For the month, the index is down 0.5% so far, following a 2.8% rally in June.

Graphic: Dollar index set for worst week since May: https://fingfx.thomsonreuters.com/gfx/mkt/mopanmyekva/DXY.png

The dollar’s downtrend began after Fed Chairman Jerome Powell wrong-footed bulls following a policy meeting this week by saying that rate increases were “a ways away” and the job market still had “some ground to cover”.

“The Fed is focused on jobs and isn’t concerned about inflation,” said Joel Kruger, currency analyst at LMAX. “The market isn’t pricing a taper now until the end of the year, if at all, and China has calmed investor nerves around regulatory crackdowns,” he said.

“These are the primary drivers of markets into Friday and the net result has been one of broad-based U.S. dollar declines and fresh record highs in U.S. equities.”

The dollar found little support overnight from U.S. gross domestic product numbers.

While the U.S. economy expanded at a 6.5% annualised rate in the second quarter, boosted by massive government aid, growth fell short of economists’ expectations for an 8.5% acceleration.

The dollar held near a two-week low against the safe haven Japanese yen at 109.52, while the euro climbed to a one-month high against the U.S. currency and last traded at $1.19.

The euro zone economy grew faster than expected in the second quarter, pulling out of a recession caused by the COVID-19 pandemic, while inflation shot past the European Central Bank’s 2% target in July.

“In general, the eurozone’s rebound from its technical recession should not be a game changer for the ECB (European Central Bank) expectations or for the euro,” ING strategists said in a note. “The short-term fate of euro/dollar still looks mostly tied to the U.S. dollar and global dynamics,” they said, adding that fresh signs of turbulence from Asia suggested it might be too early for the euro to return above $1.19.

Elsewhere, the Chinese yuan has recovered most of its Tuesday plunge to trade at 6.4566 per dollar. [CNY/]

Sentiment was helped by China’s attempt to calm frayed investor nerves by telling foreign brokerages not to “overinterpret” its latest regulatory actions.

Both the Australian and New Zealand dollars, reliant on world and Chinese economic growth, hovered near two-week highs.

The British pound was close to its highest in over a month helped by the U.S. dollar’s weaker tone and a fall in coronavirus cases in Britain.

Investors will keep a close eye on several U.S. indicators due later in the day including second-quarter employment cost index, personal income and spending for June and the University of Michigan consumer sentiment index for July.

Dollar hovers near one-month low, set for worst week since May

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Stock

Stock Markets25 minutes ago (Jul 16, 2021 05:46PM ET) (C) Reuters. FILE PHOTO: Johnson & Johnson’s Neutrogena Cool Dry Sport sunscreen, which is part...

Tech

Builders, creators and developers, this one’s for you! TechCrunch has always been about discovering fresh solutions and shining the light on exciting, new products...

Stock

(C) Reuters. FILE PHOTO: Indian billionaire Gautam Adani speaks during an interview with Reuters at his office in the western Indian city of Ahmedabad...

World News

Nowadays, you can buy just about anything online and have it delivered directly to your doorstep – even marijuana. Say goodbye to shady websites...

Disclaimer: Wisegazette.com it's managers and its employees (collectively "The Company") do not make any guarantee or warranty about what is advertised or above. Information provided by this website is for research purposes only and should not be considered as personalized financial or health advice. Copyright © 2021 Wise Gazette. All Rights Reserved