© Reuters.
By Peter Nurse
Investing.com – Updated at 14:18 GMT
The dollar index fell to record 101.405, with a decline of 0.25%, and the lowest point of decline was at 0.30%.
The decline came after the issuance of the leading indicator of the US economy, which indicated that the US economy is destined to enter a recession in the second half of this year. Data also indicated further weakness in the US labor market, which declined by -2.6% on a monthly basis.
____________________
Updated at 12:56 GMT
The US dollar index fell to 101.477, down by 0.19%, after the release of jobless claims data, which showed a higher-than-expected rise in US unemployment for the third week in a row.
The dollar is now affected by the possibility of the US economy falling into recession, and it is retreating against this background, despite its gains earlier in the week.
______________
The US dollar traded subdued in early European trade on Thursday, clinging to overnight gains as expectations mount that the Federal Reserve will tighten monetary policy further next month.
It is now declining by 0.13% to 101.532 against a basket of foreign currencies, coinciding with a strong drop in the 10-year yields by 1.26% to 3.556%, and the two-year Treasury yields fell to 4.1953% after falling by 1.63%.
The head of the Federal Reserve Bank of New York said on Wednesday that inflation remains at problematic levels and that the US central bank will work to bring it down.
It came on the heels of banking giant Morgan Stanley (NYSE:) launching a strong first quarter, joining a number of its peers in beating Wall Street’s forecasts and thus allaying recent concerns about the health of the US banking sector.
It is widely expected to deliver a final rate hike of 25 basis points in May, and then the debate begins over whether the US central bank will keep interest rates steady for the rest of the year or begin to deliver cuts at the end of 2023 as the world’s largest economy kicks off. in contraction.
The dovish mood is likely to continue as we head into the critical next few weeks of central bank meetings.
The situation is different in Europe, where data released on Wednesday showed that inflation remains an issue, especially in the UK, pointing to more interest rate hikes to come.
Various strategies on both sides of the Atlantic have recently pushed the pound and the euro to multi-month highs.
Thursday rose to 1.0956, down 2.6% over the month in March but still up 7.5% yoy.
Investors will also carefully look at a release from the ECB’s latest meeting, scheduled later in the session, for clues about policymakers’ thinking about the extent of future hikes.
“Markets appear to have fully reinforced their views on a 25 basis point increase by both central banks in May, and lower volatility in price expectations could lead to a calmer environment in FX markets,” ING analysts said in a note.
The price fell 0.1% to 1.2430, retracing the strong gains seen on Wednesday after it showed that Britain was the only country in Western Europe experiencing double-digit inflation in the walks.
Investors now expect it to rise by 25 basis points in May before peaking at 5% by September.
Elsewhere, it fell by 0.1% to 0.6709, and rose to 134.72, while it fell by 0.5% to 0.6169 after {{ecl -1063 || New Zealand’s inflation was lower than expected.
