The dollar index (DXY00) on Wednesday fell by -0.36%. The dollar on Wednesday extended this week’s losses down to a 2-week low. Weaker-than-expected U.S. economic news Wednesday on the Aug ADP employment change and Q2 GDP bolstered speculation that the Fed will be able to pause its rate hikes, which weighed on the dollar. Also, the strength in stocks on Wednesday reduced the liquidity demand for the dollar. In addition, higher-than-expected August consumer prices in Spain and Germany are hawkish for ECB policy and boosted the euro versus the dollar.
U.S. economic news Wednesday mainly was dovish for Fed policy and bearish for the dollar. Aug ADP employment change rose +177,000, weaker than expectations of +195,000 and the smallest increase in 5 months. Also, Q2 GDP was revised downward to 2.1% (q/q annualized) from 2.4%. On the bullish side for the dollar, July pending home sales unexpectedly rose +0.9% m/m, stronger than expectations of a -1.0% m/m decline.
