Dollar skids to three-week low as mixed data underscores uncertain trail ahead



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Dollar skids to three-week low as mixed data underscores uncertain trail ahead

On Friday, the US Dollar Index (DXY) measured against a basket of six major currencies on an average edged lower, as investors seemed to be concerned over a plausible recession in a near term outlook with several analysts claiming that the economy might already be grappling with a recession.

Nonetheless, the US Dollar opened up the day higher, as US Fed’s core inflation indicator, core PCE (Personal Consumption Expenditure) price index, rose by 1.0 per cent last month, reaching the highest level since 1982 on a year-on-year basis.

Over the past twelve months through June, US core PCE price index jumped 6.8 per cent. As US inflation data had cemented an ultra-hawkish Fed stance, the greenback started off the day in a robust tenure as beforementioned.

Nonetheless, after release of the University of Michigan’s manufacturing index, Dollar begins to plummet as recession fears started to bite with labour costs rising significantly over second quarter. The University of Michigan’s index for US manufacturing activity fell to 52.1 last month compared to a reading of 56.0 a month earlier.

Dollar ends lower as recession fears weigh

Citing statistics, in the day’s FX market wind-down, the US Dollar Index (DXY) measured against a basket of six major currencies slipped 0.3 per cent to 105.89, however, the index was pummelled to a three-week low of 105.53 earlier in the session.

Meanwhile, adding that the investors are reshaping their position, a chief market strategist at Payments Corpay in Toronto, Karl Schamotta said, “Traders are engaging in some quarter-end position-squaring, preparing for a period in which inflation and growth rates subside, tilting interest differentials against the dollar.

Next week's (U.S.) jobs report looms as a potential volatility catalyst, and no one wants to be caught offside if job creation slows more than expected”. On top of that, euro gained 0.2 per cent to $1.0213 against its American counterpart, however, drowned to a three-month low against the British pound.

Here is the US Dollar position as of late-afternoon US trading on Friday.

Currency bid as of late-afternoon US trading on Friday

Currencies Last Previous Session close (US) Percentage Change Year-to-date Percentage Change Highest Bid Lowest Bid
DXY 105.8800 106.2100 -0.30% 10.680% +106.6700 +105.5300
Euro/Dollar $1.0220 $1.0196 +0.23% -10.11% +$1.0255 +$1.0147
Dollar/Yen 133.3200 134.2300 -0.66% +15.84% +134.6700 +132.5050
Dollar/Swiss 0.9516 0.9550 -0.32% +4.35% +0.9593 +0.9504
Sterling/Dollar $1.2177 $1.2184 -0.05% -9.96% +$1.2245 +$1.2065
Dollar/Canadian 1.2805 1.2805 +0.01% +1.29% +1.2855 +1.2790
Aussie/Dollar $0.6987 $0.6993 -0.09% -3.89% +$0.7031 +$0.6912