US Dollar Trades Mixed as Market Sentiment Offsets Weak Economic Data
Aiswarya Gopan • 1 min read
The US dollar is trading mixed into Tuesday while other safe haven currencies like the Japanese yen and Swiss franc make their way higher amid a breakdown of the market sentiment owing to the delta variant’s spread across the world. At the time of writing, the US dollar index DXY is trading at around 92.70.
Investor confidence was further affected by a slew of disappointing economic data releasing from China, the world’s second most powerful economy that is grappling with fresh breakouts of COVID-19 infections across the country. Retail sales, fixed asset investment as well as industrial production, all came in weaker than forecast for the month of July, heightening worries that China is losing its grip on the rapid economic recovery from the coronavirus crisis.
In addition, geopolitical tensions were also raised ever since the Taliban seized control of Afghanistan’s capital, Kabul. While analysts say that its impact on global markets has been minimal so far, the worsening situation can start affecting the mood among investors shortly.
The US dollar came under further pressure in the previous session after the NY Fed’s gauge of business activity in the manufacturing sector posted a stronger than expected decline in August. The Empire State manufacturing business index dropped to 18.3 in August from a record high of 43 in July and came in below economists’ expectations of a drop to 29.
Later today, the focus will on Fed Chair Jerome Powell who is scheduled to give a speech. Investors will closely look for any clues he may share on changes to the monetary policy. Although, he may reserve such comments until later this month during the Jackson Hole symposium.