Gloom enveloped US dollar trading on Friday after the currency king edged lower following US jobless claims data that surged to a 2021 high.
Although it is only one data, but the market takes it as a sign that the US economy is slowing down and the interest rate of the Federal Reserve (Fed) has peaked.
Investors are now cutting the odds of a rate hike of 25 basis points next week to 26%, according to the CME FedWatch tool.
However, there is still one more piece of data that most investors need to look at, which is the consumer inflation report on Tuesday next week before the results of the FOMC policy meeting early Thursday morning.
Following the decline in the greenback, the euro and the pound surged to two-week and three-week highs against the US dollar respectively.
Euro investors appear to be shrugging off data that suggests the European Zone has entered recession following two consecutive contractionary readings in gross domestic product (GDP) data.
Meanwhile, the Aussie dollar continued to strengthen to trade at its strongest level in four weeks, while the New Zealand dollar was steady at a one-week high against the greenback.
The Canadian dollar remained strong at a four-week high against the US dollar ahead of the publication of Canadian employment data in the upcoming New York session.
The yen also gained strength following the weakness of the US dollar with investors now focusing on the Bank of Japan (BOJ) meeting next week.
Meanwhile, the Swiss franc soared after the chairman of the Swiss National Bank (SNB) reiterated his commitment to fight stubborn inflation, which investors interpreted as a sign that the central bank would raise interest rates.
