After acting as a proverbial punching bag all week, the U.S. dollar was finally in recovery mode overnight. The greenback touched multi-month lows versus a slew of currencies yesterday before retracing some of those losses.
Yesterday’s release of better-than-expected GDP did little to buoy the greenback as central bankers across the pond shifted towards a more hawkish stance towards their own monetary policy.
Today’s economic data came in solid, but has failed to spark a greater dollar rally. Personal income rose 0.4% in May, slightly beating expectations. However, April’s number was revised downward so May’s gains represent an overall “push.” Personal spending grew a tepid 0.1% in May, matching expectations. Household spending accounts for nearly 70% of the economy, so persistent low spending numbers could hurt the overall economy.
Overall, the U.S. dollar had a rough month. The Bloomberg Dollar Spot Index is headed for its fourth straight monthly decline, the worst run since 2011.
The Euro took a breather from its recent run against the U.S. dollar following inflation data, but remains at elevated levels. Euro area consumer price growth slowed to an annual pace of 1.3% in June, undershooting the European Central Bank’s target. However, a closer look at the numbers reveals that core inflation, excluding energy, rose 1.1%, up from 0.9% in May.
Despite the small pull-back overnight, the common currency is set to have its best quarter since 2010.
The British pound fell against the U.S. dollar for the first time in eight sessions as traders were reminded of the U.K. sluggish growth. The final reading of first quarter GDP confirmed 2.0% annual growth. Quarter over quarter growth was only 0.2%, the lowest rate since the first quarter of 2015.
The sterling is still 3.0% stronger against its America counterpart since touching a low on June 21.