Dollar index rises as U.S. stocks fell sharply on June 23, lifting demand for the U.S. currency across major pairs.
The Nasdaq led the equity drop. It fell as much as 800 points before the open, then hit an intraday low of 653.34 points down. It finished lower by 579.56 points, or 2.21%. Meanwhile, the S&P 500 lost 1.44%, the Russell 2000 fell 0.96%, and the Dow Jones Industrial Average slipped 0.09%.
The move in stocks supported the dollar. The Dollar Index gained 0.37% on the day. Notably, the biggest FX moves came against commodity-linked currencies. AUDUSD dropped 1.23%, while NZDUSD fell 0.86%.
Dollar Index Rises on Risk Aversion
USDJPY moved far less than other major pairs. The pair edged up 0.02% as traders stayed alert to possible intervention from Japanese authorities. On the prior day, USDJPY reached 161.918, just shy of the 2024 high at 161.95. The source said that marked the highest level since 1986.
U.S. data sent mixed signals. S&P Global PMI figures beat forecasts, with services at 51.3 versus 51.0 expected and manufacturing at 55.7 versus 54.8 expected. The composite reading rose to 52.2 from 51.7. However, the report also showed modest overall growth, a second straight drop in employment, and more cooling in price pressures.
Mixed U.S. Data and Macklem Remarks
In contrast, the Richmond Fed survey weakened. Its composite index fell to 4 from 13. The services gauge dropped to -1 from 14, manufacturing shipments slowed to 3 from 16, and employment slipped to -1 from 3. As a result, the report pointed to a loss of momentum after recent strength.
Federal Reserve officials stayed quiet after last week’s rate decision. The source said new Fed Chair Kevin Warsh prefers less frequent public comments from policymakers.
Outside the United States, Bank of Canada Governor Tiff Macklem spoke as USDCAD held a strong uptrend. The pair climbed from 1.3549 in early May to a new yearly high of 1.42165, a gain of nearly 668 pips, or 4.9%, in less than two months. Macklem did not discuss monetary policy directly. Instead, he pointed to global financial imbalances, strong U.S. capital inflows, and the lasting appeal of the U.S. dollar. USDCAD ended the day within 6 pips of the session high.
You can access our other news on Forex markets and global market developments here.
