The US dollar index held near 103 on Thursday after losing about 1% over the past three sessions, weighed down by weaker-than-expected US economic data and improving risk sentiment globally.
Second estimates showed that the US economy grew less than previously thought in Q2, while job creation slowed more than expected in August according to ADP. This comes on the heels of a report showing that consumer sentiment in the country fell by the most in two years in August amid souring views on the labor market, higher borrowing costs, and persistent inflation.
The dollar’s losses were exacerbated by an improving risk sentiment globally, as investors shrugged off concerns about the US economic slowdown and focused on positive developments in China and Europe. Chinese stocks rallied on Thursday after the country’s central bank announced a series of measures to support the economy, while European stocks also rose on hopes that the European Central Bank will soon begin tapering its asset purchases.
The dollar’s decline against major currencies was mixed. The euro rose to a one-week high of $1.1750, while the Japanese yen strengthened to a two-week high of 137.50 per dollar. The Australian dollar and New Zealand dollar also strengthened against the dollar, but they were still trading below key technical levels.
Looking ahead, investors will be closely watching the release of US personal consumption expenditures and weekly jobless claims data on Thursday for more clues on the state of the US economy. They will also be watching developments in China and Europe for any signs that the global economic recovery is gaining momentum.
Overall, the dollar is likely to remain under pressure in the near term as investors continue to focus on the risks to the US economic outlook and the improving risk sentiment globally.