Dollar Recovers Well After Hitting Over 2-year Low, Gains Against Peers
After plunging to its level in more than 2 years in the Asian session on Friday, the U.S. dollar rallied sharply to score fairly impressive gains against most of its peers, as risk sentiment faded a bit amid rising concerns about the economic impact of the virus outbreak.
A report released by the Commerce Department showed personal income in the U.S. slumped by more than expected in the month of June. The report also showed a substantial increase in personal spending.
The report said personal income tumbled by 1.1% in June after plunging by a downwardly revised 4.4% in May. Economists had expected personal income to decrease by 0.5% compared to the 4.2% nosedive originally reported for the previous month.
The report said personal spending surged up by 5.6% in June after skyrocketing by an upwardly revised 8.5% in May. Personal spending had been expected to jump by 5.5% compared to the 8.2% spike originally reported for the previous month.
Consumer sentiment in the U.S. deteriorated by more than initially estimated in the month of July, according to a report released by the University of Michigan on Friday. The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.
The dollar index, which slipped to 92.55, rallied to 93.54 in late afternoon trades, adding more than 0.55% to its overnight level.
Against the Euro, the dollar strengthened to $1.1765, gaining about 0.7%. The euro area economy contracted at the fastest pace on record in the second quarter amid the coronavirus pandemic, preliminary flash estimate published by Eurostat showed Friday. Gross domestic product fell 12.1% on a quarterly basis, bigger than the 3.6% drop in the first quarter. This was bigger than the economists’ forecast of 11.2% and was the sharpest decline seen since the series began in 1995.
Year-on-year, GDP was down 15% in the second quarter versus a 3.1% decline a quarter ago. GDP was expected to fall 13.9%.
The Pound Sterling was down marginally with the dollar firming up to $1.3087 a unit of Sterling.
The Japanese Yen tumbled to 106.05 a dollar and recovered slightly to 105.95 subsequently, but was still down with a sharp loss of about 1.15%.
Against the Aussie, the dollar firmed up to $0.7141, gaining 0.75% from Thursday’s close of $0.7195.
The Swiss franc was weaker at 0.9139, losing ground its previous close of 0.9089.
The Loonie was flat at 1.3415 a dollar, giving up gains, after trading at 1.3372 a dollar at one stage. Data released by Statistics Canada this morning showed the Canadian economy grew 4.5% over a month earlier in May 2020, recovering from a record 11.6% contraction in April and compared with market expectations of a 3.5% expansion.