Dollar Falls as Stocks Rally, Euro Gains on Strong Economic Signs

The US dollar index fell by -0.02% on Friday, holding just above Thursday's 3.25-month low.

Strength in stocks on Friday reduced demand for dollar liquidity, while the dollar remains weighed down by negative carryover from Wednesday's US Treasury move to boost liquidity and announce plans to increase buybacks of long-dated bonds.

The US Aug S&P manufacturing PMI fell -0.7 to 53.2, weaker than expectations of no change at 53.9, but the Aug S&P services PMI unexpectedly rose +2.8 to 56.8, stronger than expectations of a decline to 54.0 and the fastest pace of expansion in 4.5 years.

The markets are discounting a 40% probability of a +25 bp rate hike at the next FOMC meeting on September 15-16.