2024.03.0116:23:00UTC+00U.S. Dollar Drops As Weak Economic Data Boosts Rate Cut Hopes

The U.S. dollar weakened against its major counterparts in the New York session on Friday, as weak manufacturing and consumer confidence data for February increased the possibility of a rate cut in June.

Data from the Institute for Supply Management showed that the manufacturing PMI dipped to 47.8 in February from 49.1 in January, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.5.

The University of Michigan also released revised data showing consumer sentiment in the U.S. unexpectedly deteriorated in the month of February.

The report said the consumer sentiment index for February was downwardly revised to 76.9 from the previously reported 79.6. Economists had expected the reading to be unrevised.

With the unexpected downward revision, the consumer sentiment index is now below the January reading of 79.0.

The data has contributed to a downturn by treasury yields, which has likely added to optimism about the outlook for interest rates.

The greenback retreated to 150.10 against the yen and 0.8846 against the franc, from an early 2-day high of 150.71 and a 3-1/2-month high of 0.8892, respectively. The greenback is seen finding support around 146.00 against the yen and 0.84 against the franc.

The greenback fell to 1.0841 against the euro and 1.2647 against the pound, reversing from an early high of 1.0797 and a 10-day high of 1.2599, respectively. The currency may locate support around 1.10 against the euro and 1.31 against the pound.

The greenback edged down to 0.6111 against kiwi and 0.6527 against the aussie, off its previous highs of 0.6078 and 0.6489, respectively. The greenback is poised to challenge support around 0.64 against the kiwi and 0.69 against the aussie.

The greenback touched 1.3554 against loonie, down from an early 2-day high of 1.3601. If the greenback falls further, it is likely to test support around the 1.30 region.