Dollar Plunges, Yen Surges Sharply
The US dollar weakened sharply during Thursday's trading (July 30) after US economic growth came in lower than expected and monthly core inflation began to ease. The US Dollar Index fell approximately 0.8% to the 100.00 area, briefly breaking below that psychological level.
The US economy grew by only 1.5% in the second quarter, below the 2.1% forecast. Core PCE rose 0.1% month-on-month—missing the 0.2% estimate—while annual core inflation cooled to 3.3% from 3.4%.
However, inflationary pressures have not entirely vanished. Jobless claims stood at 197,000, lower than anticipated, while the GDP Price Index surged 6.3%, far exceeding the 3.6% forecast. These conditions indicate a slowing economy alongside persistent price pressures.
EUR/USD strengthened about 0.5% to 1.1530 after the Eurozone economy posted better-than-expected growth. GBP/USD also rose roughly 0.8% to 1.3470 after the Bank of England held interest rates steady, with three officials favoring a hike.
USD/JPY plummeted approximately 2.4% to 159.50 following a sudden surge in the yen. The magnitude of the move sparked speculation regarding intervention by Japanese authorities, though no official confirmation has been made ahead of the Bank of Japan's decision. AUD/USD jumped about 1.1% to trade near 0.7030, moving past the psychological 0.7000 level. The Australian dollar benefited from broad Greenback weakness and increased demand for risk-sensitive currencies following the softer-than-expected US economic growth and monthly inflation data.
Consequently, the dollar remains vulnerable to further pressure if US data continues to weaken and suspected yen intervention persists. However, high GDP price inflation and a still-solid labor market could limit the slowdown and keep the possibility of a tight Fed policy stance alive. (arl)
Source: Newsmaker.id
