The dollar index (DXY00) on Thursday fell by -0.40%. The dollar came under pressure Thursday from weaker-than-expected U.S. economic reports on Q2 GDP and Aug pending home sales. Losses in the dollar accelerated on dovish comments from Chicago Fed President Goolsbee, who warned that policymakers were at risk of raising interest rates too much. In addition, strength in the yen Thursday weighed on the dollar after comments from Japanese Finance Minister Suzuki sparked speculation Japan was close to intervening in the currency market to support the yen. Finally, strength in stocks Thursday reduced the liquidity demand for the dollar.
Thursday’s U.S. economic news was mostly weaker than expected and bearish for the dollar. Q2 GDP was unchanged at 2.1% (annualized q/q), weaker than expectations of an upward revision to 2.2%. Also, Aug pending home sales fell -7.1% m/m, weaker than expectations of -1.0% m/m and the biggest decline in 11 months. Conversely, weekly initial unemployment claims rose +2,000 to 204,000, showing a stronger labor market than expectations of 215,000.
