Investing.com – The U.S. dollar fell on Wednesday, adding to losses from the previous session, as the euro benefited despite signs of economic weakness in the euro zone.
At 04:00 ET (09:00 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was down 0.1% at 100.080, after falling more than 0.5% in the previous session, its biggest daily percentage decline in a month.
The dollar continues to fall
The US dollar is struggling to find friends after it started its rate-cutting cycle with a massive 50 basis point cut earlier this month.
Data on Tuesday showed the U.S. economy unexpectedly contracted in September, raising concerns about further growth in the world’s largest economy, especially as signs of contraction emerge in the labor market.
“In a surprise move yesterday, US consumer confidence was much weaker than expected. The market is very sensitive to this because the US consumer has been resilient for a long time,” analysts at ING Bank said in a note.
Markets now price in a 59.5% chance of a 50 basis point rate cut at the Fed’s next policy meeting, up from just 37% a week ago, according to the CME FedWatch tool.
Euro nears 13-month high
In Europe, the euro rose 0.1% to 1.1188, hovering around a 13-month high hit last month, with the euro benefiting from a weaker dollar despite data pointing to economic weakness in the euro zone.
“There is not much happening on the European calendar today, so a range-trading EUR/USD pair looks likely. But the fact that EUR/USD is holding above 1.1100 is encouraging for modest EUR/USD traders like us,” ING added.
The pound fell 0.1% to 1.3394, retreating from levels not seen since March 2022.
Sterling was supported as the Bank of England is widely seen as less likely to be aggressive in interest rate cuts this year than the Federal Reserve.
Bank of England Governor Megan Green is due to speak later in the session, and her comments will be studied for further clues on the timing of monetary easing by the British central bank.
Sweden’s consumer price index rose 0.1% to 10.1041, ahead of the Riksbank’s latest policy-setting meeting.
The central bank is widely expected to cut interest rates by 25 basis points later today, but Riksbank Governor Erik Theden has not ruled out the possibility of a half-point cut.
Yuan nears record levels
China’s Nikkei stock index fell 0.1% to 7.0238, near its lowest since May 2023, after Beijing announced a series of stimulus measures on Tuesday, including cutting reserve requirements for banks, as well as lowering mortgage rates.
The S&P 500 rose 0.4% to 143.81, while it fell 0.2% to 0.6878, just below a 19-month high after a sharp rise in the previous session.
Data released on Wednesday showed that inflation fell to a three-year low in August, while the decline in core inflation was less pronounced.
The central bank kept interest rates steady on Tuesday, saying that while inflation is expected to decline in the near term, it only expects price pressures to sustainably reach its target range by 2026.
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