The US Dollar has pulled back across the majors this morning as the Conference Board's US leading indicator fell more than expected at a rate of 0.7 percent in July, marking the sharpest drop since the credit crunch began at the end of last summer.
Looking at a breakdown of the index, jobless claims, building permits, and stock prices all took a toll. However, the declines are not entirely surprising given the broad deterioration in the labor markets, housing sector, and equity markets. The news has led the
US dollar to pull back across the majors, as the overbought currency finally shows signs of correction. Meanwhile, Credit Suisse overnight index swaps are showing diminishing rate hike expectations for the Federal Reserve over the next 12 months, as they now price in 56bps of increases compared to over 75bps just a week ago. Furthermore, the latest
forex positioning numbers show that the US dollar is likely to weaken before continuing its rally.
Credit Suisse Overnight Index Swaps (1 Year, Federal Reserve)
Source: Bloomberg
Written by Terri Belkas, Currency Strategist of DailyFX.com
E-mail: tbelkas@dailyfx.com
Dollar Tumbles As US Leading Indicator Plunges By The Most Since Start of Credit Crun
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