Dollar Plummets as US Economic Data Disappoints

The US Dollar (USD) is experiencing a significant downturn, extending its losses for a third consecutive day against major currencies. The US Dollar Index (DXY), which measures the USD’s performance against a basket of six currencies, fell to near 105.00, its lowest level since early November, marking a more than 2% decline for the week.

This decline is fueled by growing concerns about the US economic outlook, with analysts suggesting the end of US economic exceptionalism. Recent economic data has fallen short of expectations, exacerbating these concerns.

Key Factors Driving the Dollar’s Weakness:

Weak ADP Employment Data: The ADP Employment Change report for February revealed only 77,000 new private-sector jobs, significantly below the expected 140,000.1  

Softening Services Sector Data: Following a disappointing manufacturing report earlier in the week, the Services PMI is anticipated to show a slight decline, further indicating a slowdown in US economic activity.

Potential Impact of Tariffs: Concerns persist that potential tariffs could negatively impact US economic growth.

Anticipation of Fed Rate Cuts: The CME FedWatch Tool indicates a growing probability of Federal Reserve interest rate cuts, adding to the downward pressure on the Dollar.

Upcoming Economic Events:

S&P Global Services PMI (final reading)
ISM Services PMI
Federal Reserve Beige Book release
Federal reserve Richmond President Barkin speech.
European Central Bank (ECB) rate decision on Thursday.
US Nonfarm Payrolls report for February on Friday.