Band Saqib Iqbal Ahmed
NEW YORK, July 22 (Reuters) – The U.S. dollar shrugged off its initial weakness on Friday to climb against a basket of currencies, after data showed U.S. business activity shrank for the first time in nearly two years in July, the slowdown services outweighing growth in the manufacturing sector.
S&P Global said on Friday its preliminary — or “flash — — U.S. composite PMI production index fell far more than expected to 47.5 this month from a final reading of 52.3 in June.
With a reading below 50 indicating that business activity had contracted, it’s a development likely to fuel heated debate over whether the US economy is back – or close to – d a recession after rebounding strongly from the slowdown in early 2020 at the onset of the covid19 pandemic.
The dollar found some support in safe-haven flows late on Friday as investor appetite for riskier assets waned as US indices sold off on some weak earnings reports.
Against a basket of currencies =USD, the dollar was up 0.1% at 106.73. For the week, the index was down 1.2%.
Friday’s dismal data in the U.S. reflects an impact on sentiment, similar to that seen elsewhere in the world, said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
“This reflects tighter financial conditions and also the fact that inflationary pressures remain elevated,” Rai said.
Rai, however, said he wasn’t reading too much of the dollar’s weakness on Friday.
“Even if the U.S. economy slows down somewhat, I don’t think you can extrapolate some kind of medium-term dollar weakness…because we’re seeing similar things elsewhere,” he said.
Overall activity in the euro zone declined due to an accelerated slowdown in manufacturing and a near stall in growth in the services sector, as inflation pushed consumers to cut spending, showed the S&P Global Composite Purchasing Managers Index, a good indicator of economic health.
The euro was down 0.4% against the dollar at $1.0196.
The pound slid 0.2% against the dollar to $1.1979 after data showed UK businesses grew at their slowest pace in 17 months in July, fueling concerns over a slowdown in Britain’s economy grapples with inflation at its highest level in four decades.
The risk-sensitive Australian dollar AUD=D3 was 0.26% lower at $0.6911, while the kiwi USD=D3 fell 0.17% to $0.6242.
In cryptocurrencies, bitcoin BTC=BTSP was roughly flat on the day at $23,074.82, on pace to end the week up around 10% as traders bet the recent bout of weakness that had engulfed the market was over.
World exchange rateshttps://tmsnrt.rs/2RBWI5E
(Reporting by Saqib Iqbal Ahmed, editing by William Maclean)
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