US Dollar tumbles to seven-month low as dismal ISM data spurs up recession fret

• Financial

On Monday, the US Dollar Index (DXY) measured against a basket of six major currencies on an average had fallen to a fresh seven-month low as traders appeared to be bracing for an impending recession in the US economy following last week’s dismal ISM (Institute for Supply Management) data.

In the matter of the fact, latest sweeping downswing in ISM’s index for US flash composite PMI (Purchasing Managers’ Index), also had eased possibilities of an ultra-hawkish Fed, repercussions of which had eventually had a greater toll on investors’ morale.

Besides, later last week, the ISM (Institute for Supply Management) was quoted saying that its index for US flash composite PMI had dipped to a 45.0 last month compared to a reading of 46.4 scored a month earlier. Apart from that, according to ISM data, US services sector had contracted for the first time in more than two-and-a-half years last month to the lowest level since the era of great financial depression of 2007-2009, suggesting that the US economy might just be heading towards an impending recession.

Besides, US factory activity fell for a second successive month in December, prodding investors to gamble in favour of a less-hawkish Fed which eventually had led to a tottering in American Dollar on Monday.

Dollar falls as recession worries rise

Citing statistics, in the day’s FX market wind-down, the US Dollar Index (DXY) measured against a basket of six major currencies tumbled 0.71 per cent to 102.79, while the bloc’s common currency Euro rose 0.96 per cent to $1.0747, marking off the highest reading since June 9.

In tandem, the British Pound jumped 0.87 per cent to $1.2197 against its American peer, while the safe-haven Swiss Franc surged 0.82 per cent to $0.92, the strongest closure since Mach last year. Besides, risk-sensitive loonies like of Aussies gained 0.8 per cent to $0.6930 against the American currency, while the Kiwis soared 0.45 per cent to $0.6378.