US dollar slides on disappointing data

The US dollar trended broadly lower on Thursday in response to mixed US economic data.

Meanwhile, the pound is stable so far this morning, with GBP/EUR steady at €1.1813, and GBP/USD flat at $1.2638. GBP/CAD is rangebound at CA$1.7335, while GBP/AUD and GBP/NZD climb to AU$1.9058 and NZ$2.0834, respectively.

Coming up, will a stalling of US durable goods orders weigh on the US dollar later this afternoon?

What’s been happening?

The US dollar came under pressure yesterday, as investors took stock of some uneven US data.

Acting as a key headwind for the ‘greenback’ was the latest US durable goods orders release. This saw order growth print at 0.1% in May, while April’s reading was revised down from 0.7% to just 0.2%.

While the finalised US GDP for the first quarter saw growth revised up from 1.3% to 1.4%, this was still in stark contrast with the 3.4% recorded at the end of 2023 and added to the pressure on the US dollar.

The USD selling bias helped to underpin the euro on Thursday, thanks to the strong negative correlation between the pairing.

However, these gains remained limited in scope following a surprise deterioration in Eurozone economic sentiment in June.

Finally, the pound was left to trade in a narrow range yesterday after a report from indeed suggesting that UK job listing have fallen by around 20% over the past year, stoked concerns over the strength of the UK labour market.

What’s coming up?

Looking ahead, the spotlight today is likely to be on the Federal Reserve’s preferred indicator for inflation, the core PCE price index.

Economists forecast May’s index will report inflation slowed from 2.8% to 2.6%, striking its lowest levels since March 2021.

This may stoke expectations the Fed will begin cutting interest rates in September and is likely to drag on the US dollar this afternoon.

For EUR investors the focus will be on Germany’s latest jobs report. If it shows that the number of unemployed people in the Eurozone’s largest economy continued to creep higher in June it could act as a headwind for the euro.

In the meantime, today’s session opened with the publication of the UK’s finalised GDP figures for the first quarter. Will another upwards revision to domestic growth help to buoy the pound this morning?