Dollar Drops on Recession Worries

At 02:55 ET (07:55 GMT), the Dollar Index, which follows the dollar versus a basket of six other currencies, dropped 0.1% to 104.688 after dropping 0.3% overnight.

Initial unemployed claims rose moderately last week, and data was displayed on Thursday. In distinction, continuing claims increased to a 10-month high, counting to suspicions that the world’s biggest economy may glide into recession next year.

Several influential bank leaders cautioned this week of the possibility of the U.S. economy stalling dramatically. This, together with last month’s data indicating that U.S. consumer prices had risen less in October, was heavy on the dollar.

The dollar index has lost almost 7% this quarter, setting it on track for the biggest quarterly drop after 2010.

Nevertheless, this could still vary with more U.S. inflation data anticipated afterward in the session in the shape of the November PPI release. This should have risen 0.2% in November, a yearly rise of 7.2%, which would fall from 8.0% the prior month.

This comes ahead of next week’s closely watched consumer inflation data. Any downside shock will likely trigger another round of dollar selling and the Fed’s final policy meeting of the year.

Other Currencies

EUR/USD climbed 0.1% to 1.0567, with the euro profiting from the dollar selloff forward of next week’s ECB conference.

The ECB can also restrict the pace of its aggressive interest rate hikes, having risen rates by a total of 200 bps since July, but with Eurozone CPI still at double figures, the central bank will require to resume hiking for some time.

GBP/USD climbed 0.1% to 1.2242, with the Bank of England arranged to promote its monetary policy decision next week, with another interest rate growth of 50 bps anticipated.