Investing.com – The U.S. dollar fell on Thursday, struggling to gain a foothold after weak economic data raised expectations of an outsized Federal Reserve rate cut later this month.
At 04:35 ET (08:35 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.2% lower at 101.139, continuing to retreat from a two-week high of 101 .79 at the beginning of the week.
Big Fed cuts coming?
The US dollar has struggled to make friends for most of this week after disappointing US economic data raised the possibility of a hard landing for the world’s largest economy, prompting an aggressive approach by the US central bank to easing monetary policy.
Tuesday’s survey showed the sector is still in contraction territory, with the US falling to its lowest level in three-and-a-half years in July, suggesting the labor market is losing strength.
There is weekly and data to digest later in the session, ahead of the crucial monthly report on Friday.
Traders now see a 45% chance that the Fed will cut rates by as much as 50 basis points at its meeting later this month, and have priced in more than 100 basis points of rate cuts by the end of the year.
“Unless there is a sharp downside miss in some of today’s numbers, expect DXY to trade well within a 101-102 range. But the multi-week bias is bearish,” ING analysts said in a note.
Euro, pound sterling higher
In Europe, trading traded 0.1% higher at 1.1086, with the common currency helped by German industrial orders that unexpectedly rose in July.
German orders rose 2.9% in July from the previous month, data showed on Thursday, a significant improvement from the forecast 1.5% decline.
In addition, the statistics agency revised the data for June to show an increase of 4.6% from a previous figure of 3.9%.
July figures for the eurozone will be released later in the session and are expected to show a small improvement after a 0.3% decline the month before.
“EUR/USD has held around support at 1.1040 this week and is likely to consolidate just below 1.1100 – unless today’s US data surprises on the downside,” ING added.
rose 0.1% to 1.3157, with the pair up more than 3.5% over the past month, boosted by expectations that the Bank of England will keep interest rates higher for longer than in the United States.
Yen near one-month high
In Asia, the yen fell 0.1% to 143.62, helped by safe-haven demand but also on views that upcoming Bank of Japan rate hikes are going against the tide of a global easing cycle.
The yen rose to a one-month high of 143.20 earlier in the session, and for the week so far it is up about 1%.
traded 0.2% lower to 7.0999, hovering near its strongest level in more than a year.
