Dollar falls after depressing US data

Analysts are not attaching importance to today’s fall in the dollar, because other countries are also seeing early signs of an economic recession.


Dollar index    chart in 5 minute intervals

The US dollar fell against a basket of currencies on Friday after data showed US business activity contracted for the first time in nearly two years in July as a sharp slowdown in the services sector outweighed continued modest growth in manufacturing.

S&P Global said on Friday that its provisional – or „sudden” – US Composite Manufacturing PMI fell much more than expected to 47.5 this month from a final reading of 52.3 in June.

With a reading below 50 indicating contraction in business activity, this event is likely to spark a heated debate about whether the US economy is back in or close to recession after a sharp recovery following the early 2020 downturn in the early months of the COVID-19 pandemic.

Against a basket of currencies, the dollar fell 0.34% to 106.25.

The data reflects a decline in sentiment similar to that seen elsewhere in the world, said Bipan Rai, head of North American FX strategy at CIBC Capital Markets in Toronto.

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