Dollar fell due to weak data that reinforces expectations of US ‎economy recession

US dollar fell on Thursday after weak data reinforced expectations that the world’s largest economy is likely on its way to recession, which supports the view that the Federal Reserve may pause in June from raising interest rates after an expected increase next month.

According to “Reuters”, the dollar recorded its lowest levels against the yen and the euro after data showed an increase in weekly jobless claims, a sharp decline in economic activity in the states located in the middle of the US coast on the Atlantic Ocean, and a decline in existing home sales.

But the statements of Loretta Mester, President of the Federal Reserve Bank of Cleveland, who said that the US central bank still has other interest rate increases in the future, helped the dollar reduce its losses. But she said that the Federal Reserve’s hike in interest rates over the past year to crush high inflation is coming to an end

Her comments came a day after New York Federal Reserve Bank President John Williams said inflation remained at problematic levels and that the US central bank would work to bring it down.

In mid-day trading on Thursday, the dollar index, which measures the performance of the US currency against a basket of other major currencies, fell 0.1 percent to 101.84, after it slid on Friday to its lowest level since early February.

The dollar index has fallen 1.6 percent since the beginning of the year, after significant gains of more than eight percent in 2022.

Against the yen, the dollar fell 0.3 percent to 134.30 yen. It fell 0.5 percent against the Swiss franc, to 0.8934 francs

The euro settled at $1.0962, not far from the one-year high it reached last week against the US currency.

The European Central Bank is expected to raise interest rates at its seventh consecutive meeting on May 4th, which will support the euro. Policy makers agree on an increase of about 25 basis points, but the possibility of approving a larger increase is still on the table.

The pound sterling fell 0.1 percent to $ 1.24, away from the ten-month high of $ 1.2545 it hit on Friday. Higher-than-expected consumer price index numbers in Britain boosted bets that the Bank of England (British central bank) will raise interest rates in May.