Investing.com – The dollar hovered above ten-month lows as investors doubted whether the Federal Reserve would hike interest rates again this year in the wake of recent economic data pointing to a sustained slowdown in the pace of inflation.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.04% to 94.94.
The dollar turned positive in the U.S. session but remained under pressure amid bearish sentiment as manufacturing data undershot forecasts while weaker-than-expected inflation data released last week signalled that the Federal Reserve may struggle to justify an increase rate increase later this year.
The Empire State manufacturing index dropped from 19.8 to 9.8 in July, missing expectations for a more modest decline to 15.
A drop in sterling, however, underpinned a recovery in the greenback, with GBP/USD down 0.31% to $1.3060, after the second round of Brexit negotiations got underway.
Both British secretary David Davis and EU negotiator Michel Barnier said they would provide update on negotiation proceedings on Thursday, after their teams have spent four days tackling a range of priority issues.
Meanwhile, a drop in oil prices continued to pressure the oil-linked Canadian dollar, with USD/CAD up 0.21% to $1.2675.
The drop in the Canadian dollar comes after a period of intense investor demand, following the Bank of Canada’s decision to increase its benchmark rate for the first time seven years last week.
USD/JPY rose to Y112.70, up 0.14%.
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