Weekly Roundup: US dollar recovers as jobless claims drop
Amy Richards July 24th 2023 - < 1 minute read
Having tumbled to multi-month lows the previous week, the US dollar remained on the back foot at the start of last week.
As the session progressed, a souring market mood helped the safe-haven ‘greenback’ start to recoup some losses.
The recovery continued, with USD seemingly benefitting from the sharp selloff in GBP following the UK inflation rate reading.
Thursday brough further tailwinds. An unexpected drop in US jobless claims indicated that the American labour market remains tight, reigniting Federal Reserve rate hike bets.
With risk aversion persisting through to the end of the week, USD ended the session on a positive note.
Looking at the week ahead, USD could be muted as markets await the Fed rate decision on Wednesday. Another quarter-point hike is priced in, so the bank’s forward guidance is in focus.
If recent signs of rapidly cooling inflation prompt the Fed to strike a more cautious tone, the ‘greenback’ could face selling pressure.
More high-impact data closes off the week, with second-quarter GDP on Thursday and the core PCE price index – the Fed’s preferred measure of inflation – on Friday. Could a slowing US economy and easing inflation see USD slide?
Written by
Amy Richards