Bloomberg’s gauge of the dollar slid as much as 0.3% on Thursday to touch its lowest level since July 2023 following the news, with the safe-haven yen and Swiss franc leading the advance against the greenback.
The dollar was already under pressure from a weaker-than-expected US inflation print, which helped spur traders to fully price in two quarter-point Federal Reserve interest rate cuts this year.
“The weak US CPI reasserts the soggy dollar backdrop, while the Middle East headlines also failed to spur a bounce in the dollar, which reflects its waning status as a haven currency during geopolitical flare-ups,” said Alex Loo, macro strategist at TD Securities in Singapore.
Traders will be monitoring US producer-price data due later Thursday for confirmation of subdued pressures. Some of its components feed into core personal consumption expenditure, the Federal Reserve’s preferred measure of inflation.
Currency traders will also be watching the upcoming Group of Seven summit to see if there are any trade negotiation developments.
“We are watching the G-7 summit closely for pending trade deals between the US and its key trading partners (e.g., Mexico and Canada),” Loo said. “Leaks this week may boost sentiment, especially for the likes of the Canadian dollar and Mexican peso.”
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