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Peter Davis

An writer at FOMOdrive

  • Aug 31, 2023
  • 2 min read

The dollar collapsed after news from the USA

After the release of data showing a weak growth in the US economy, the dollar dropped.

ADP's labor market data was worse than anticipated.

00The dollar index attempted to reach its two-week low of 103.00 or lower.

For the past three days, the value of the American currency has been decreasing.

Revised data released by the US Department of Commerce on Wednesday showed that the US economy grew by 2.1% year-on-year in the second quarter, lower than the initial estimate of 2.4%. No change in the estimate was anticipated.

Growth was slower than anticipated, due to downward adjustments to private investment in inventories and fixed capital investment. However, this was partially balanced out by upward revisions to state and local government spending, exports, consumer spending, and housing investment.

The Personal Consumption Expenditure Price Index (PCE) increased by 2.5%, a decrease of 0.1% from the initial estimate. The core PCE index rose by 3.7%, a decrease of 0.1% from the previous estimate.

ADP reported that private sector job growth in the US had slowed more than anticipated, with 177,000 jobs added in August, compared to the expected 195,000.

According to ADP, the decrease in job creation is mainly caused by a decrease in recruitment in the leisure and hospitality industry, which has been busy in recent times.

Since Wednesday morning, the euro has been increasing in value due to news from Europe.

The FxPro analyst team stated that early estimations of consumer inflation in August showed a rise in Germany and Spain, which could potentially sustain the Consumer Price Index (CPI) for the entire eurozone. The official data for this will be revealed on Thursday.

The likelihood of a 25bp increase in the rate at the European Central Bank's September gathering has increased to 60%.

According to FxPro, the multi-week dollar rally has created the potential for a short-term correction to the 102.1-102.4 range on DXY, which could open the door for renewed growth momentum.

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