The dollar index traded 0.2% higher to 101.182, having declined to a 13-month low of 100.51 earlier in the week
The U.S. dollar rose Thursday, bouncing off recent lows ahead of a series of key economic numbers, while the euro pulled back.
At 09:10 GMT, the dollar index traded 0.2% higher to 101.182, having declined to a 13-month low of 100.51 earlier in the week.
The dollar has recovered from recent lows, helped by its safe-haven status on the back of fears of renewed trade tensions between China and the West as well as heightened geopolitical tensions in the Middle East, Libya and Ukraine.
However, the U.S. currency remains under pressure given the prospect of lower U.S. rates next month, with the Fed set to reverse its aggressive tightening cycle which had supported the dollar for most of the last two years.
The dollar has declined nearly 2.9% for the month thus far, putting it on track for its sharpest monthly drop in nine months.
Focus turns to more important economic data later in the session, including the weekly initial jobless claims data and a revised figure on GDP data for the second quarter.
The first reading on Q2 GDP had shown the U.S. economy remained resilient, spurring hopes that the country’s economy was set for a soft landing, but recent data has also shown a weakening labour market.
PCE price index data is due on Friday and is likely to factor into the outlook for interest rates.
In Europe, EUR/USD traded 0.4% lower to 1.1079, after preliminary data from German states pointed to a decline in national inflation this month, as well as the broader eurozone figure.
The inflation rate in North Rhine-Westphalia, Germany’s most populous state, dropped to 1.7% in August from 2.3% in July, and there were similar declines in the other states.
Germany publishes its national figures later in the session, before the eurozone inflation data release, on Friday, which is expected to decline to 2.2% in August, down from 2.6% in the previous month.
The ECB started cutting interest rates in June, and a sharp decline in inflation is likely to prompt policymakers to cut once more next month.
GBP/USD traded flat at 1.3188, not far from Tuesday’s high of 1.3269, its strongest level since March 2022.
In Asia, USD/JPY gained 0.1% to 144.72, steadying after recording a strong rally earlier this week.
The yen was buoyed by persistent bets that the BoJ will raise interest rates further this year, following a string of hawkish signals from BoJ officials. But inflation data somewhat ducked the central bank’s expectations for a steady rise in inflation.
USD/CNY traded 0.3% lower to 7.1060, buoyed by a series of stronger-than-expected midpoint fixes by the People’s Bank.
