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16/08/24
125
USD Softens, JPY Set for Weekly Decline on Fading US Recession Worries
On Friday, the dollar dropped the yen and was lower against other peer currencies after U.S. housing numbers disappointed, as investors evaluated economic data to determine the Federal Reserve’s appetite for interest rate cuts.
In July, U.S. single-family homebuilding dropped as house prices and higher mortgage rates kept prospective buyers on the sidelines, indicating the market was still depressed at the beginning of Q3.
The dollar was 0.96% lower at 147.87 versus the Japanese yen, after hitting a two-week high of 149.40 in the previous session. The yen was however on track for the biggest weekly drop since June after U.S. economic data eased recession fears and supported bets of smaller rate cuts.
Mesirow’s managing director and senior investment strategist, Uto Shinohara, said the disappointing housing data put pressure on the U.S. dollar again, as the DXY continues to float at about 103.
The dollar movements still depend on data, with more emphasis likely placed on jobs data and the economy’s health and less on inflation with headline CPI dropping below 3% on the previous reading. The market is waiting for more Fed messaging as Jackson Hole starts next week.
Risk-sensitive currencies like sterling were strong as the improved economic outlook led to a rally in equities.
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