Dollar Plunges as Weak Growth and Inflation Data Spark Intervention Speculation

The US Dollar fell sharply on Thursday after weak US economic growth and underlying inflation moderated. The US Dollar Index (DXY) declined around 0.8% and traded near 100.00, falling below the psychological 100.00 level.

The preliminary US Gross Domestic Product expanded at an annualized rate of 1.5% in the second quarter, below the 2.1% market forecast. Core Personal Consumption Expenditures inflation rose only 0.1% MoM in June, compared with expectations of 0.2%, while the annual rate eased to 3.3% from 3.4%.

However, Initial Jobless Claims came in at 197K, below the expected 200K, and the GDP Price Index surged 6.3%, well above the 3.6% forecast, suggesting that inflationary pressures remain elevated despite slower economic growth.