Tuesday, September 25, 2018

Dollar still on the downside after weak U.S. dataDollar still on the downside after weak U.S. data

Investing.com – The dollar remained broadly lower against the other major currencies on Wednesday, after the release of disappointing U.S. data and as uncertainty over the future path of U.S. interest rates weighed.

The Institute of Supply Management reported on Wednesday that U.S. service sector activity increased slightly less than expected in August.

The greenback was already under pressure since Federal Reserve official Lael Brainard said on Tuesday that the central bank should delay raising interest rates until it is confident inflation that is now “well short” of target will rebound.

The yen and Swiss franc turned lower, with USD/JPY up 0.23% at 109.06 and with USD/CHF adding 0.15% to trade at 0.9568.

Safe-haven demand had strengthened earlier, after a North Korean diplomat on Tuesday warned that his country was ready to send “more gift packages” to the U.S.

The threat came after the rogue regime conducted its sixth and largest ever nuclear test on Sunday, prompting U.S. Defense Secretary James Mattis to say that any threat to the U.S. or its allies would be met with a “massive military response”.

EUR/USD was up 0.09% at 1.1924, while GBP/USD added 0.12% to 1.3048, just off a four-week high of 1.3066 hit earlier in the day.

The Australian and New Zealand dollars remained lower, with AUD/USD down 0.11% at 0.7987 and with NZD/USD sliding 0.28% to 0.7213.

Earlier Wednesday, the Australian Bureau of Statistics reported on Wednesday that the country’s gross domestic product expanded by 0.8% in the second quarter, below expectations for an expansion of 0.9%.

Year-on-year, the Australian economy grew 1.8% in the last quarter, disappointing expectations for an expansion of 1.9%.

Meanwhile, USD/CAD tumbled 1.44% to a 27-month low of 1.2198 after the Bank of Canada raised interest rates to 1.0% from 0.75%, saying that growth in the country’s economy is becoming more broad-based and self-sustaining.

At the same time, Statistics Canada reported that the trade deficit narrowed to C$3.04 billion in July from a revised C$3.76 billion in June. Analysts had expected the trade deficit to hit C$3.10 billion in July.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.15% at 92.14 by 05:20 a.m. ET (09:20 GMT).

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