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Dollar Slides to A One-Month Low

Dollar Slides to A One-Month Low

The U.S. dollar index fell to a nearly one-month low on Tuesday as European Central Bank President Christine Lagarde indicated eurozone interest rates would likely be favourable by the end of the third quarter, boosting the euro.

Lagarde’s remarks implied an increase of at least 50 basis points in the ECB deposit rate. They fueled speculation of more extensive rate hikes this summer to combat record-high inflation; it was partly due to rising energy prices resulting from Russia’s war against Ukraine and massive public-sector stimulus to combat the pandemic.

The euro was up 0.39 per cent at $1.0732. The euro has recovered 3.7 per cent in the last seven trading sessions after falling to its lowest level since January 2017, at $1.0349.

The market has only lately begun to price this differential; hence, this difference in expectations could send EUR/USD higher in the coming days. The dollar was down 0.362 per cent against a basket of other major currencies, trading at 101.77, its lowest level since April 26.

The dollar fell further as statistics revealed that U.S. corporate activity slowed moderately in May. Higher prices cooled demand for services and continued supply limitations due to COVID-19 lockdowns in China; moreover, the Ukraine crisis impacted factory output. S&P Global (NYSE: SPGI) said that it’s flash U.S. The Composite PMI Output Index, which measures the manufacturing and service sectors, recorded the smallest growth in four months.

Other Currencies

Sterling sank dramatically against the U.S. dollar as PMI data revealed that growth in the U.K.’s private sector slowed considerably more than expected this month; it fueled recession fears as inflation pressures rose. The British pound fell 0.56 per cent to $1.2515.

The riskier Australian dollar fell 0.43 per cent to $0.7080, while the New Zealand kiwi fell 0.41 per cent to $0.6441. A currency market volatility index was 9.46 per cent; not far from a two-year peak above 10.5 per cent earlier this month.

The post Dollar Slides to A One-Month Low appeared first on FinanceBrokerage.

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