After experiencing its largest weekly loss of the year, the dollar dipped slightly on Monday versus a basket of currencies as traders held off on further selling until after the release of economic data and policy decisions.
A new 16-month high of $1.12440 was reached by the euro as it continued to rise, up 0.15%.
The dollar’s exchange rate versus the yen dropped to its lowest level in two months on Friday, falling 0.27% to 138.38 yen per dollar.
“Euro/dollar appears a bit overstretched in the short term and could face a correction this week,” he continued.
The US inflation statistics from the previous week fueled investor speculation that the Federal Reserve was nearing the end of its cycle of rate hikes, and the dollar index experienced its worst weekly decrease since November 2022, down 2.25% on the week.
Chinese Growth Data Slightly Above Low Forecasts
On Thursday, statistics indicated that US producer prices barely increased in June and that producer inflation’s annual increase was the smallest in nearly three years.
The report came the day after consumer price data showed a minor increase in prices last month.
The Fed and European Central Bank are both expected to raise interest rates next week, but after that, market pricing suggests that the Fed will likely halt before making any reductions in interest rates in 2019. In Europe, however, another boost is likely in the works.
Chinese growth data came in slightly above low forecasts on Monday, but the currency market didn’t react much since traders had already factored in a slow quarter and were waiting to see if the government increased assistance to encourage spending.
The Australian and New Zealand dollars declined; the Australian dollar last traded at $0.6815, down 0.34 percent from its highest of $0.6895 last week, and the Kiwi currency last traded at $0.6345, down 0.44 percent from its five-month high of $0.6412 on Friday.