Investing.com – The U.S. dollar edged higher on Thursday, recovering from recent lows ahead of a series of key economic readings, while the euro retreated.
At 04:10 ET (09:10 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, was up 0.2% at 101.182, after falling to a 13-month low of 100.51 earlier in the week.
Dollar recovers from lows
The dollar has recovered from recent lows, helped by its safe-haven status amid concerns over renewed trade tensions between China and the West, as well as growing geopolitical concerns in the Middle East, Libya and Ukraine.
However, the US currency remains under pressure amid the possibility of a US interest rate cut next month, with the Federal Reserve preparing to reverse the aggressive tightening cycle that has supported the US dollar for most of the past two years.
The US dollar is down about 2.9% so far this month, putting it on track for its biggest monthly decline in nine months.
Focus shifts to more important economic data later in the session, including weekly data and a revised reading of second-quarter GDP data.
The first reading for the second quarter showed the U.S. economy remained resilient, boosting hopes that the world’s largest economy is preparing for a soft landing, but recent data also showed a weak labor market.
Consumer price index data – the Fed’s preferred measure of inflation – is due out on Friday and is likely to influence interest rate expectations.
Euro falls as German inflation slows
In Europe, the euro fell 0.4% to 1.1079, after preliminary data from German states pointed to a decline in national inflation this month, as well as the broader figure in the euro zone.
Inflation in North Rhine-Westphalia, Germany’s most populous state, fell to 1.7% in August from 2.3% in July, and there were similar declines in other states.
Germany publishes its national figures later in the session, ahead of data on Friday, which is expected to fall to 2.2% in August, down from 2.6% the previous month.
The central bank began cutting interest rates in June, and a sharp drop in inflation is likely to prompt policymakers to cut them again next month.
Sterling fell to 1.3188, not far from Tuesday’s peak of 1.3269, its strongest level since March 2022.
Yen steadies after strong rally
In Asia, the index rose 0.1% to 144.72, steady after a strong rise earlier this week.
The yen was supported by continued bets that the Bank of Japan will raise interest rates again this year, following a series of hawkish signals from bank officials. But the country’s inflation data came in below the BOJ’s forecast of a steady rise in inflation.
Sterling fell 0.3% to 7.1060, supported by a series of stronger-than-expected midpoint reforms by the People’s Bank of China.
But sentiment toward China remained bleak amid fears of a trade war with the West, especially after Canada joined the United States and the European Union in imposing heavy tariffs on China’s electric vehicle sector.
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