On Friday, the American Dollar tumbled against most major and emerging market currencies after a University of Michigan survey report had unveiled that its index for US Consumer Sentiment had plunged to the lowest since 2011 earlier in August, stoking frets that the U.
of Mich. report coupled with a softer-than-anticipated Consumer Price Index in July could bolster the US Fed Chair Powell’s view of a delay in tapering of fiscal support alongside a likely rate-hike by next year. Apart from a weaker U.
of Mich. survey report, in the day’s broader weakness in the greenback was largely prodded by views that US inflation indicators might already have peaked with US PPI (Producer Prices Index) hitting a record last month, justifying the US Fed Chair Jerome Powell’s earlier remarks that a latest outburst in inflation indicators would be ‘transitory’ and the economy might still be miles away from stomaching a near-term abate of fiscal supports.
Nevertheless, earlier in the day, the University of Michigan said in a survey report that its index for US Consumer Sentiment jolted to 70.2 earlier in August compared to a final reading of 81.2 registered in July, marking up the third-largest monthly decline in the index in more than 50 years.
Dollar falls as US Consumer Sentiment ebbs
Citing statistics, the US Dollar Index (DXY) measured against a basket of six major currencies on an average had wrapped the day 0.5 per cent lower to 92.52, the lowest level since August 6, while on the week, the US Dollar Index shed 0.3 per cent.
In tandem, in the day’s FX market wind-down, the greenback had shrugged off 0.75 per cent against the safe-haven Japanese Yen to 109.61 yen per Dollar, while another safe-haven currency Swiss Franc gained as much as 0.89 per cent against its American counterpart to $0.9154.
Besides, the British Pound added 0.43 per cent to $1.3866 against its American peer, while the bloc’s common currency euro, shared among 19 member states, climbed 0.57 per cent to $1.1797. Australian Dollar, a closely watched proxy for risks in global trade, gained 0.49 per cent to $0.7371 against US Dollar, while commodity-linked Canadian Dollar added 0.10 per cent to $1.2515.
On the week, the US Dollar fell 0.56 per cent against Japanese Yen and closed nearly flatlined against Swiss France and British Pound, while euro rose 0.28 per cent against the greenback and the Australian Dollar and Canadian Dollar gained 0.19 per cent and 0.33 per cent respectively.
Meanwhile, citing an ease of inflationary pressure lately, a chief market strategist at Cambridge Global Payments in Toronto, Karl Schamotta said, “The prime driver this week was this idea that a deceleration in inflation pressures will reduce the impetus for an earlier tapering of Federal Reserve asset purchases.
What's happened here is traders have moved their expectation for a tapering announcement from September toward November, perhaps even December”.