3 weeks ago
Forex

Dollar Swings Higher Despite Downbeat U.S. Economic Data

Investing.com - The U.S. dollar flirted with session highs against a basket of major currencies Friday, shrugging off mostly downbeat

Investing.com - The U.S. dollar flirted with session highs against a basket of major currencies Friday, shrugging off mostly downbeat U.S. data that pointed to signs of an economic slowdown.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.35% to 96.37, just below session highs of 96.44.

The dollar remained somewhat resilient in the wake of a slew of data on manufacturing, inflation and consumption that did little to quash the narrative of a slowing U.S. economy.

The Federal Reserve's preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, rose 1.9% in the 12 months through December, in line with economists' forecast.

ISM manufacturing data for February showed a downtick to 54.2, missing expectations of 55.5. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12% of the U.S. economy.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, fell 0.5% in December, the Commerce Department said on Friday. That missed expectations for a 0.2% decline.

The fall in personal spending represented "the biggest decline since 2009 and serves to give more credence to the abysmal retail sales figure released a couple weeks ago," BMO said in a note.

The consumer exhibiting "significant trepidation" going into year-end is more than sufficient to keep the Federal Reserve on the sidelines for the time being, the bank added.

The weaker data come just days after Federal Reserve Chairman Jerome Powell praised the strength of the U.S. economy, though he did flag some headwinds, or "crosscurrents" to growth, including a weaker backdrop for the global economy.

The greenback was also boosted by a slip in the pound as traders took profits in the latter following sharp gains during the week amid growing expectations the U.K. will seek to delay Brexit.

GBP/USD fell 0.40% to $1.3208, while EUR/USD was flat $1.1370.

USD/JPY rose 0.53% to Y111.97, hitting 10-week highs as risk sentiment continues to ride high on hopes the U.S. and China will reach a deal to end their bitter trade dispute.

USD/CAD surged 0.87% as the loonie was pressured by gloomy data showing Canada's economy is close to stalling.