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Title: Dollar Down on View Fed to Slow Hikes

Jul 29, 2022 01:06AM ET

By: AnalysisWatch

The dollar fell in Asia on Friday morning as investors bet on slower interest rate hikes by the US Federal Reserve.

At 1:03 p.m. EDT, the US Dollar Index fell 0.37 percent to 105.95 points, tracking the greenback against a basket of other currencies.

The USD/JPY currency pair fell 0.77% to 133.24.

The AUD/USD currency pair rose 0.29% to 0.7005 and the NZD/USD currency pair rose 0.36% to 0.6312.

The USD/CNY pair fell 0.06% to 6.7433 and the GBP/USD pair rose 0.18% to 1.2191.

The U.S. gross domestic product released on Thursday fell 0.9% year-on-year in the second quarter, according to the Commerce Department's preliminary estimate. The first quarter saw a 1.6 decline.

Economists believe that two consecutive quarters of decline signal a technical recession.

In the US, however, the arbiter of recession is the National Bureau of Economic Research, which defines it as a significant decline in economic activity that is widespread throughout the economy, lasts for more than a few months, and is usually visible in output, employment, real income, and other indicators.

On Wednesday, the Fed raised interest rates by 75 basis points to 2.25-2.5%, as markets had expected.

Fed Chairman Jerome Powell said that based on the strength of the labor market, he does not think the U.S. is in a recession.

Markets have now priced in the possibility that the Fed will slow the pace of rate hikes by half a point at its next meeting in September.

Elsewhere, U.S. President Joe Biden and Chinese President Xi Jinping are planning a private meeting that will be the first between them since Biden became president.

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