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U.S. Dollar Experiences Decline Amid Strong Nvidia Earnings
In early trade on Thursday in Europe, the U.S. dollar saw a slump, a shift cushioned by remarkable earnings outcomes from Nvidia. A critical focus for investors now is crucial business activity surveys that will gauge the global economy's condition.
By 09:10 GMT (04:10 ET), the Dollar Index, a gauge comparing the U.S. dollar's performance against six other currencies, had plummeted by 0.4% to land at 103.472. This represents a fall of nearly 1% this week.
How Risk Sentiment Influences The Dollar
Spirited earnings from artificial intelligence giant Nvidia (NASDAQ:NVDA) have spurred global positivity, creating a ripple effect that has seen the safe-haven dollar lose favor for more cyclical currencies.
While the U.S. dollar has staggered from its peak this week, it's still boasting a 2% increase for the year as traders drift away from high hopes of numerous Federal Reserve rate cuts this year.
Publicized on Wednesday, the Federal Reserve's meeting minutes from late January showcased a hesitance to slash interest rates in the short term. This conservative perspective aligns with speeches made this week by multiple Fed officials, expressing worries over sustained inflation.
Primed for release are weekly unemployment numbers and vital monthly data on manufacturing and services PMI for February — giving insight into the core strength of the economy.
According to analysts at ING, the game plan for the upcoming weeks involves the dollar staying in demand, which could be followed by a dip in March in line with a softer jobs report and a muted February CPI reading.
Eurozone Services PMI An Indicator Of Economic Improvement
Across the pond, EUR/USD rose 0.5% to 1.0869, propelled by an increasingly favorable investment landscape.
Latest PMI figures suggest that despite Germany is facing economic hurdles, France's numbers have begun to demonstrate noteworthy growth.
Broadly, the Eurozone revealed promising news with services PMI hitting the 50.0 mark - the level distinguishing expansion from contraction. The composite index surpassed expectations at 48.9, although the Eurozone manufacturing sector is battling tough conditions.
With UK PMI data anticipated to show substantial growth in the country’s preeminent services sector, the pound was trading 0.5% higher at 1.2701 against the dollar.
USD/TRY rose by 0.4% to 31.0335 before Turkey’s central bank meeting, where interest rates are predicted to hold steady at 45%.
As per ING, this year's performance of emerging market currencies suggests the Turkish lira leads with 3% total return gains against the dollar.
Yen Trades Weak After Release Of PMI Data
Despite PMI data suggesting a contraction in manufacturing activity and a downslide in service sector growth in February, USD/JPY trading remained largely stable at 150.25.
In light of recent governmental warning signs, markets are on high alert for any interference from the Japanese government.
As concerns over a regional economic turnaround intensify, USD/CNY edged up slightly to 7.1902, moving closer to 7.2.
This week, potential government intervention in the currency markets appears to have hindered more substantial losses for the yuan.
