Dollar Slips on Weaker-US Economic Data

The US dollar fell against major currencies after weaker-than-expected economic data was released. The dollar index (DXY00) dropped by -0.04% today, reversing an earlier gain.

The disappointing figures included a 10.5% month-over-month decline in new home sales to a six-month low of 607,000, as well as a 0.8 point drop in consumer confidence to a seven-month low of 89.4. The Richmond Fed manufacturing survey also fell short of expectations, dropping by -1 to 4.

The weaker US economic data reduced the likelihood of a rate hike at the next FOMC meeting on September 15-16, with markets pricing in a 40% chance of a +25 bp increase. The dollar's decline was also attributed to a report from the New York Times that the State Department is preparing to send US diplomats back to embassies in the Middle East, suggesting a reduced risk of hostilities with Iran.