US Dollar Index (DXY) fades late Wednesday’s corrective bounce off 101.41 as it retreats to 101.82 during early Thursday. In doing so, the greenback’s gauge versus six major currencies justifies the challenges to the US employment sector, as well as threats to the US Dollar’s reserve currency status.
The greenback portrayed a corrective bounce from the two-month low the previous day amid fears of a recession in the US, mainly due to downbeat US statistics. That said, the ADP Employment Change for March dropped to 145K from 200K expected and an upwardly revised prior of 261K. On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.
Apart from the US data, the fresh US-China tension over Taiwan also put a floor under the US Dollar prices amid a sluggish session.
It’s worth noting, however, that the Fed policymakers’ inability to convince markets of their hawkish capacity joined downbeat US data and talks surrounding the de-dollarization to exert downside pressure on the US Dollar Index.
Russia’s latest likes for the Chinese Yuan and the China-Brazil pact to ignore the US Dollar as an intermediate currency are the key news that recently challenges the greenback’s imperial status. On the same line are the chatters that some of the US Congressmen have proposed a Gold Standard Restoration Act to defend the US Dollar. The bill suggests re-pegging the greenback with a fixed amount of the Gold’s weight like it was before 1971.
On a different page, market sentiment remains sour and restricts the US Dollar’s downside. While portraying the mood, Wall Street close and drowned the US Treasury bond yields.
Looking forward, US weekly jobless numbers may entertain the US Dollar traders ahead of Friday’s key employment data.
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