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Dollar Strength Tempered by Mixed Signals, but Weekly Gain Secured
While other currencies experienced consolidation, the U.S. dollar saw a dip against most of its peers on the day. However, robust U.S. economic data has led traders to scale back thier expectations for near-term Federal Reserve interest rate reductions, positioning the dollar for a weekly advance.
The euro gained 0.4% against the dollar, reaching $1.1643, and the pound rose 0.26% to $1.3453. Despite these intraday gains, both the euro and the pound are on track for weekly declines. The dollar index, which measures the currency’s performance against six major global currencies, was last recorded at 98.31. This represents a 0.5% increase for the week, building upon the previous week’s 0.91% rally.
Recent U.S. economic indicators released on thursday revealed a stronger-than-anticipated rebound in retail sales for June. Additionally, initial jobless claims for unemployment benefits fell to a three-month low in the past week. These figures, coupled with earlier data indicating the largest monthly increase in U.S. consumer prices in five months for June, have influenced market sentiment regarding Federal Reserve policy. Currently, traders are pricing in approximately 45 basis points of U.S. rate cuts for the remainder of the year, a reduction from the nearly 50 basis points anticipated at the week’s commencement.
Despite these positive economic signals, the dollar’s outlook remains subject to uncertainty. Recent days and weeks have seen the currency impacted by fiscal concerns stemming from the Trump management’s substantial spending and tax-cut legislation. Furthermore, President Donald Trump’s persistent criticism of Federal Reserve Chair Jerome Powell for not lowering interest rates has also contributed to market volatility.
Year-to-date, the dollar index has declined by 9.15%. This follows a significant sell-off in March and April, during which President Trump’s unpredictable trade policies eroded confidence in U.S. assets, leading to a downturn in the currency, Treasury bonds, and Wall Street equities.
In other currency movements, the dollar weakened by 0.4% against the Swiss franc, trading at 0.8001 francs.
Cryptocurrency Market Activity
In the cryptocurrency sphere,Bitcoin hovered just above the $120,000 mark. The world’s leading cryptocurrency reached an all-time high of $123,153.22 this week, coinciding with the U.S. Congress passing legislation to establish a regulatory framework for dollar-pegged stablecoins. Ether, the second-largest cryptocurrency, demonstrated stronger performance, hitting a six-month peak. It was last trading up 5.6% on the day at $3,610.