United States Dollar Index slumps as suspected Japanese intervention rattles markets
- The US Dollar Index falls amid speculation that Japanese authorities may have intervened in the foreign exchange market.
- US GDP misses forecasts while Core PCE inflation cools in June.
- Elevated Oil prices continue to pose upside risks to inflation despite easing price pressure.
The US Dollar Index (DXY) tumbles on Thursday as a sharp surge in the Japanese Yen (JPY) fuels speculation that Japanese authorities intervened to support the currency. USD/JPY plunged nearly 480 pips, falling below the psychological 160 mark and dragging the Greenback lower across the board. Tokyo has not officially confirmed any action.
At the time of writing, the DXY, which tracks the US Dollar’s value against a basket of six major currencies, trades around 100, down nearly 0.80% on the day after touching 99.87, its lowest level since June 17.
The Greenback also takes a hit from slower US growth. The economy expanded at an annualized pace of 1.5% in the second quarter, falling short of the 2.1% forecast and slowing from the first quarter’s 2.1% growth, according to the US Bureau of Economic Analysis.
Inflation data offer little help to the Dollar. The Core Personal Consumption Expenditures (PCE) Price Index rose 0.1% in June, down from 0.3% in May and below the 0.2% consensus forecast. The annual rate dipped to 3.3% from 3.4%, matching forecasts. Personal Income growth slowed to 0.2%, while Personal Spending eased to 0.3%.
The data comes a day after the Federal Reserve (Fed) left interest rates unchanged at 3.50%-3.75%. The hold was widely expected, but the decision still carried a hawkish edge, with three policymakers voting for a 25-basis-point rate hike. Fed Chair Kevin Warsh also reiterated the central bank’s commitment to restoring price stability.
Following the PCE release, traders trimmed their bets on a September rate hike. The CME FedWatch Tool now shows around a 55% probability of a 25-basis-point increase, down from roughly 60% before the data.
However, inflation risks remain tilted to the upside as the war in the Middle East keeps a geopolitical premium embedded in Oil prices. Against this backdrop, the Fed may need to maintain restrictive monetary policy for longer.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.49% | -0.66% | -2.53% | -0.29% | -0.95% | -1.38% | -1.02% | |
| EUR | 0.49% | -0.18% | -2.06% | 0.20% | -0.48% | -0.91% | -0.53% | |
| GBP | 0.66% | 0.18% | -1.86% | 0.38% | -0.29% | -0.72% | -0.32% | |
| JPY | 2.53% | 2.06% | 1.86% | 2.28% | 1.60% | 1.15% | 1.57% | |
| CAD | 0.29% | -0.20% | -0.38% | -2.28% | -0.66% | -1.10% | -0.70% | |
| AUD | 0.95% | 0.48% | 0.29% | -1.60% | 0.66% | -0.42% | -0.05% | |
| NZD | 1.38% | 0.91% | 0.72% | -1.15% | 1.10% | 0.42% | 0.43% | |
| CHF | 1.02% | 0.53% | 0.32% | -1.57% | 0.70% | 0.05% | -0.43% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
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