The ascent of the dollar has come to a halt as robust economic data from the United States alleviates concerns of a recession.

Dollar's climb stalls as strong U.S. data soothes recession fears

Feb 16, 202311:30

NZDUSD

+0.39%

EURUSD

+0.28%

DXY

−0.23%

GBPUSD

+0.32%

The dollar stalled on Thursday as investors showed a higher risk appetite on signs the overall global growth outlook is improving following a slew of strong U.S. economic data, even as the Federal Reserve looks set to raise interest rates further.

The greenback unwound some of its previous day's gains on Thursday, though it still remained near a six-week high against a basket of currencies.

The New Zealand dollar

NZDUSD

rose 0.34% to $0.6302, but was not far off Wednesday's six-week low of $0.6253.

Similarly, the euro

EURUSD

edged 0.15% higher to $1.0703, having fallen to its lowest in more than a month earlier in the week.

The U.S. dollar index

DXY

slipped 0.09% to 103.71, after touching a six-week top of 104.11 in the previous session.

"The U.S. economy continues to operate well. There's very strong labour market data coming through, and the consumers are well supported," said Jarrod Kerr, chief economist at Kiwibank. "We do think the Fed's got a little bit more work to do."

Markets are now expecting the Fed funds rate to peak above 5.2% by July. (FEDWATCH)

However, the resilience of the U.S. economy has also brought about some cheer that the global growth outlook may not be as grim as initially expected, spurring some risk-on appetite.

"If we take a step back, the better-than-expected U.S. data should support global growth picture. In addition, China's reopening story has yet to fully play out and if data in the coming weeks starts to show a pick-up in activity, then this should bode well for global growth," said Christopher Wong, a currency strategist at OCBC.

The Australian dollar was last 0.09% higher at $0.6913, having slid more than 0.5% earlier in the session, after a surprising fall in Australia's January employment figures.

"The readings for January have really undershot market expectations," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

"Overall, some weakness indicated by the report ... probably caused markets to pare back some of the interest rate rises pencilled in for the RBA rate hikes."

Sterling

GBPUSD

rose 0.1% to $1.2050, after slumping more than 1% in the previous session.

This added to signs that further hefty BoE interest rate hikes are unlikely.

#USDollar_Rebound_or_Reversal?# #Fed# #OPINIONLEADER#