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02/08/24
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USD Drop Falls as Data Indicates Economy Slowing Down
On Friday, the U.S. dollar dropped in early European trade as weak data increased worries of a sharp slowdown in the world’s biggest economy, possibly leading to the Federal Reserve loosening monetary policy aggressively.
The U.S. dollar index, which measures its strength against 6 other major currencies, traded 0.2% down at 103.997 as it continues to decline after falling 1.7% in July, the weakest monthly performance this year.
Data overnight showed U.S. manufacturing activity in July contracted at the fastest rate in 8 months, while a measure for employment dropped sharply, increasing the possibility for a recession in the U.S.
It also shows risks to the payrolls report due later today were to the downside.
Economists are anticipating the U.S. economy in July will have created 177K jobs, moderating from 206K in the previous month.
It is expected the unemployment rate, which has inched up in each of the past 3 months, will stay steady at 4.1%.
ING analysts said in a note they were bearish on the dollar due to evidence from employment components of the NFIB and ISM surveys indicating the risks were skewed to a weaker payroll print which should pull the USD lower.
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