Dollar Falls Fresh 5-week Lows Against Other Major Rivals

The dollar settled at a fresh five-week lows against a basket of other major currencies amid Tuesday’s session, followed by Japan’s stimulus measures announced and as expectations on the U.S. rate hike started to ease.  

USD/JPY has seen a 0.64% decline to changed hands at 101.76, suggesting its lowest level on the record.

The strong yen came in after the cabinet of Japan’s Prime Minister Shinzo Abe released statement of a fresh stimulus package, citing part of their initiative to help lift the economy.

The package holds about ¥13.5 trillion in fiscal measures, while the direct spending is expected to reach ¥7.5 trillion, suggesting most of it will settle in the next two years.

Subsequently, the greenback continued to struggle after data posted a 1.2% U.S. growth rate in an annual basis, posting below a 2.6% estimate.

According to the Institute for Supply Management, the index of manufacturing activity has seen a 52.6 decline last month from an earlier drop of 53.2 in June. Analysts, therefore, anticipated a downbeat index to 53.0 in July.    

Given that disappointing data, expectations begun easing for an unexpected rate hike from the Federal Reserve.

Meanwhile, EUR/USD added 0.30% to a five-week high of 1.1196.

The pound also edge higher, with GBP/USD climbed 0.50% and settled at 1.3243, while USD/CHF tumbled 0.25% to 0.9661 at the close.

Market players ignored reports from research firm Markit and the Chartered Institute of Purchasing & Supply, citing their U.K. construction purchasing manager’s index dropped to 45.9 in July from the last month’s reading of 46.0.

Analysts expected the index to decline by about 43.8 in the previous month.

The Australian and New Zealand dollars strengthened, with AUD/USD up by about 0.48% at 0.7574 and with NZD/USD rallying to 0.64% to end the session at 0.7217.

The Aussie regained from earlier losses after the Reserve Bank of Australia cut its benchmark interest rate from 1.75% to a fresh record-low of 1.50% relative to expectations.

Building approvals tumbled 2.9% in June, compared to an estimated gain of 0.5%, according to the Australian Bureau of Statistics.

In other news, Australia’s trade deficit shows a broadly wider A$3.195 billion in June from revised A$2.418 billion in May. Thus, analysts anticipate the trade deficit to show below A$2.000 billion in June.  

Further, USD/CAD dipped 0.34% to end the session at 1.3070.

The U.S. dollar index, which gauges the dollar’s strength against a basket of other major rivals, fell 0.40% at 95.37 at the close, suggesting its lowest level on the record.

U.S. Data Undermines Fed’s Rate Hike

The dollar hovered almost three-week lows amid Tuesday’s session after U.S. economic data turned into negative, undermining the unexpected Federal Reserve rate hike while the Australian dollar digests the possibility of a policy easing within the day.

The dollar index against a basket of other major rivals remained steady at 95.758, dropping as low as 95.384 in the previous week after showing its lowest level in three months.

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