US Dollar Under Pressure Following Fresh Data

The US dollar has been under downward pressure since the open of trading on Wall Street following the release of a batch of data that aligns with the Federal Reserve’s preferred trajectory.

DXY Performance

The Dollar Index, which measures the performance of the US dollar against a basket of major currencies, fell to 105.88 points earlier on Thursday versus the previous day’s close of 106.05 points. At the time of writing, the Index is -0.12% down at 105.927. The index dipped to an intraday low of 106.08 points, matching its lowest level since May 17.

Economic Data

On the data front; US initial jobless claims rose to a higher-than-expected level of 1.839 million in the week ending June 22, according to data released on Thursday. This was up from the previous week’s reading of 1.821 million and above market expectations of 1.820 million.

The increase in jobless claims suggests that the US labor market may be weakening, which is in line with the Federal Reserve’s preferred path for the economy. As a result of this weakening and speculation has emerged that Fed policymakers may be more likely to cut interest rates in the near future.

Implications, Temporary Decline

The weakness in the US dollar is likely to be temporary, as the Federal Reserve is still expected to embrace higher for longer interest rates in the coming months. However, the data could still have some negative implications for US exporters, as a weaker dollar makes their products more expensive overseas.

Overall, the data is mixed and does not provide a clear picture of the health of the US economy. However, it is worth noting that the dollar’s decline comes at a time when the Federal Reserve is becoming increasingly concerned about the risk of inflation.