The dollar began the day sliding lower, with USD/JPY slipping below 147. However, the trend shifted soon after some soft economic data from Europe, following the further slowdown in China that we saw from the manufacturing and services PMI figures earlier. Markets upped their bets on the European Central Bank reducing interest rates next year, with inflation also slowing in the Eurozone.

As a result, the euro fell, with EUR/USD sliding from 1.0975 to 1.0950 before extending losses to 1.0910 as the dollar stayed strong. The pair is now trading below its 100-hour and 200-hour moving averages of 1.0959 and 1.0938, respectively. As a result, the short-term trend is bearish.

The dollar recovered more ground, with USD/JPY recovering to 148.50 before reversing down to around 148. The commodity currencies were stronger versus the dollar earlier, but those gains have since faded, with the AUD/USD sliding from 0.6640 to 0.6600 and the NZD/USD falling from 0.6180 to 0.6150. Earlier we got the PCE price index and unemployment claims from the US, which came close to expectations, followed by some hawkish rhetoric from FED members, which are keeping the demand on for the USD.

Comments from the New York Fed President Williams