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Dollar Down as Recession Fears Grow over Fed’s Hawkish Stance

Forex Jun 24, 2022 07:36
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© Reuters.

By Zhang Mengying

Investing.com – The dollar was down on Friday morning in Asia, and is set for its first weekly decline this month as investors’ recession fears grew after U.S. Federal Reserve signaled its resolution to tame inflation “unconditionally.”

The U.S. Dollar Index that tracks the greenback against a basket of other currencies edged down 0.17% to 104.25 by 1:28 AM ET (5:28 AM GMT).

The USD/JPY pair edged down 0.12% to 134.76.

The AUD/USD pair gained 0.34% to 0.6912, while NZD/USD pair jumped 0.46% to 0.6304.

The USD/CNY pair inched down 0.06% to 6.6947. while the GBP/USD pair edged up 0.16% to 1.2280.

The EUR/USD rose 0.19% to $1.0543, after tumbling 0.44% overnight over disappointing German and French purchasing managers’ index figures, which spurred expectations that the European Central Bank (ECB) might deliver less aggressive monetary policies.

“The market has started to trim a reasonable amount out of pricing for the next couple of ECB meetings,” National Australia Bank (OTC:NABZY) interest-rate strategist Ken Crompton said, according to Reuters.

“There have been a couple of factors there which have really added up, which have really started to question how far the ECB will be able to get into its tightening.”

Recession fears over tightening monetary policy also lingered in the state. U.S. manufacturing purchasing managers index (PMI) released on Thursday was 52.4 in June, lower than the 56 predicted by Investing.com while 57 was recorded in May, which indicates slower factory activity in June.

Fed Chair Jerome Powell stressed that Fed's inflation fight is “unconditional” in his second day of testimony to Congress, while Fed Governor Michelle Bowman said on the same day that she supports another 75-basis points interest rate hike in July, followed by a few more half-point hikes.

Dollar Down as Recession Fears Grow over Fed’s Hawkish Stance
 

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