The U.S. dollar saw a weak session on Thursday with slowing economic growth raising prospects for another rate cut by the Federal Reserve.
After the recent data showing a continued contraction in the country’s manufacturing activity in the month of September and a report showing a less than expected increase in private sector jobs, a report from the Institute for Supply Management today showed growth in the U.S. service sector slowed by more than anticipated in September.
With a trade agreement between the U.S. and China unlikely to happen anytime in the foreseeable future, it is feared that unless there is more monetary easing by the central bank, growth will stagnate and the economy might even slip into a recession.
The dollar index, which rose to a 29-month high of 99.67 a couple of days ago, declined to 98.64 around late morning today, and was last seen hovering around 98.90, down 0.12% from previous close.
A report released by the Institute for Supply Management Thursday morning showed growth in the U.S. service sector to have slowed by more than anticpated in the month of September.
The ISM said its non-manufacturing index dropped to 52.6 in September after climbing to 56.4 in August. The index had been expected to show a more modest dip to 55.0.
With the much bigger than expected decrease, the non-manufacturing slumped to its lowest level since hitting 51.8 in August of 2016.
Data released by the Labor Department showed a modest increase in first-time claims for U.S. unemployment benefits in the week ended September 28th. The data said initial jobless claims rose to 219,000, an increase of 4,000 from the previous week’s revised level of 215,000.
Economists had expected jobless claims to inch up to 215,000 from the 213,000 originally reported for the previous week.
Meanwhile, a report from the Commerce Department said factory orders edged down by 0.1% in August after surging up 1.4% in July. Economists had expected orders to dip by 0.2%.
Against the euro, the dollar weakened to 1.1000 before recovering to 1.0970, but was still languishing in negative territory, albeit with a marginal loss.
The pound sterling was stronger by more than 0.3% with a unit of sterling fetching $1.2338, up from previous close of $1.2298.
The dollar was weak against the Japanese yen as well, with a unit of the greenback getting 106.87 yen, nearly 0.3% less than 107.17 yen on Wednesday.
The dollar shed more than 0.5% against the Aussie with the Aussie-Dollar pair at 0.6742.
However, against the loonie and Swiss franc, the U.S. currency held the upper hand, gaining modestly, at 1.3337 and 0.9984, respectively.
While weak crude oil prices contributed to the loonie’s weakness, recent disappointing Swiss economic data weighed on franc.
The material has been provided by InstaForex Company – www.instaforex.com