The US Dollar was finally recovering after being broadly lower late yesterday. The US Dollar Index had fallen from the recently struck 2-year high as concerns grow that the repercussions from the brewing China-US trade rift are likely to result in lower interest rates. The latest data from the US has not met expectations, and there is concern that the slowdown in global growth will necessitate the Federal Reserve loosening policy to accommodate further weakening. Markit reported that the preliminary Manufacturing sector reading for May fell to 50.5, a 10-year low and missing the 52.5 expected. The preliminary reading for the Services sector also was surprisingly low at 50.9, against a predicted 53.2. For reference, the 50.0 level separates an economy which is expanding from one which is contracting.
As reported at 10:33 am (JST) in Tokyo, the USD/JPY was trading at 109.7020 Yen, up 0.0803% and moving off the session trough of 109.480 Yen. The EUR/USD was trading at $1.1186, down 0.0259% while the GBP/USD was trading at $1.2661, a gain of 0.0261%.
US Durable Goods Data Could Weigh on Sentiment
According to the latest survey from FedWatch, market players expect the Federal Reserve to cut its benchmark lending rate later this year. Only about one-third of the survey respondents believe rates will be unchanged in October, while just yesterday, one-half of the respondents believed the same thing. As economic data continues to come in on the US economy, those expectations will shift. Later today, the US Census Bureau will be releasing durable goods orders (non-defense and excluding aircraft) for April, and analysts and economists polled are forecasting a fall to -0.3% from 1.0% (which was adjusted downward from 1.3%).