Apr 24 2024: In early European trading on Wednesday, the U.S. dollar rebounded following a selloff in the previous session, as market participants await upcoming economic data for insights into the Federal Reserve’s future monetary policy stance.
By 04:40 ET (08:40 GMT), the Dollar Index, which gauges the dollar against a basket of six other major currencies, was up 0.2% at 105.695, rebounding from its overnight dip of 0.4% and reaching its highest level since April 12.
The dollar’s retreat yesterday was partly due to a cooling in U.S. business growth, reflected in April’s four-month low activity levels.
While this data can influence FX movements, major adjustments in Fed expectations typically require lower inflation, weak employment figures, or explicit Fed communication.
The first-quarter GDP data due on Thursday and the personal consumption price expenditures index on Friday could provide more substantial insights into future Fed actions.
Euro Reverses Some Gains from Previous Session
EUR/USD dipped 0.1% to 1.0689 after Tuesday’s nearly 0.5% gain, driven by robust business activity in the eurozone, especially in services.
Germany’s Ifo business climate index also improved in early April, rising to 89.4 from a revised 87.9, contributing to the positive sentiment.
While the European Central Bank is expected to cut rates at its June meeting, Bundesbank President Joachim Nagel hinted that further easing might not follow if eurozone inflation remains resilient.
GBP/USD also slipped 0.1% to 1.2430 after Tuesday’s 0.8% climb, supported by strong British business activity data.
USD/JPY remained near 34-year highs at 154.89, inching closer to the 155 level, despite warnings of potential government intervention to stabilize the yen.
The Bank of Japan’s upcoming meeting will focus on inflation and economic growth outlooks, with rates expected to remain unchanged post-March’s historic hike.
USD/CNY edged higher to 7.2460, while AUD/USD rose 0.3% to 0.6502, buoyed by stronger-than-expected consumer CPI inflation in Australia for the first quarter.