Dollar rises after dropping on weak economic data

by Jonathan Adams
dollar index

The dollar index rose 0.12% at 104.16, having dropped to its lowest since mid-April at 103.99

The dollar rose on Tuesday after dropping to its lowest against the euro, sterling and Swiss franc since mid-March overnight as signs of a softening U.S. economy strengthened the case for earlier Fed interest rate cuts.

Investors were looking towards U.S. job openings data later in the day, which will provide an insight into the state of the labour market and could push the U.S. currency down.

The euro gained $1.0916 for the first time since March 21 in the Asian trading session, but gave up some ground to sit 0.2% lower at $1.0886.

Sterling reached its highest since mid-March too at $1.2818 but was also down 0.2%.

As the U.S. currency found a footing, the dollar index rose 0.12% at 104.16, having dropped to its lowest since mid-April overnight at 103.99.

Data on Monday showed a second consecutive month of slowdown in manufacturing activity and an unexpected drop in construction spending, causing the dollar index to drop nearly 0.6%.

The dollar is starting to show signs of weakness, according to Chris Turner, global head of markets at lender ING. Today’s US JOLTS job openings data could determine whether recent dollar losses are the beginning of an important new trend.

The U.S. JOLTS is due out at 1400 GMT and will show the number of vacancies in May. It will also report on the number of people voluntarily quitting their job.

This figure had soared through the pandemic as tight labour markets prompted staff to quit jobs in search of higher pay, Turner added. This piece of data is seen to have a good lead on wage inflation.

Japan’s yen bucked the trend on Tuesday and continued to gain against the dollar after jumping on Monday, with the U.S. currency down 0.43% at 155.34, its weakest in two weeks.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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