The opening of August saw the US dollar trade lower after returning to gains when it closed late last week following profit -taking by investors over the weekend and the end of the month.
However, the performance worsened, as the US dollar depreciated further in the NY market session following still embracing risks related to statements from Fed policymakers last week that they were in no hurry to raise interest rates and halt economic stimulus.
The US dollar index, which measures the greenback against six major currencies, fell 0.17% to a trading level of 91.937. The US dollar index last week fell 0.88%, the worst week since early May. According to Marc Chandler, head of market strategy at Bannockburn Global Forex, market risk appetite is starting to pick up again.
Adding to the pressure on the US dollar was the weak Manufacturing ISM data where it fell from 60.6 points to 59.5 points in July. New bookings also fell from 66.0 points to 64.9 points.
On the other hand, the Euro strengthened 0.16% against the US dollar to trade $ 1.8884. This shows little reaction to the July manufacturing Purchasing Managers ’Index (PMI) report which is seen as a market driver. The pound strengthened 0.17% to $ 1.3913 ahead of the Bank of England meeting later this week.
The dovish tone from the Fed caused the market to be less interested in betting on the US dollar. Thus, Win Thin, head of global currency strategy at Brown Brothers Harriman, thinks the strengthening of the US dollar is unlikely to happen in the near future until the Fed’s narrative is hawkish in tone.
