The dollar fell from two-year highs against a basket of currencies on Friday (24.5.2019) after orders for US-made capital goods fell, adding to evidence of a slowdown in manufacturing activity and the broader economy, partly due to the impact of the trade war with China.
* The weaker-than-expected data, a measure of business spending plans, sent the dollar lower and deepened a slide that began on Thursday after a report showed manufacturing activity hit its lowest level in nearly a decade in May.
* Taken together, the reports suggest a sharp U.S. economic slowdown is underway, which could undermine the dollar's safe-haven status.
* The dollar fell 0,27% to 97,587 units and was 0,8% from the two-year high reached in the previous session of 98,371.
* "The IMF suggests that U.S. import tariffs are mostly paid by U.S. companies, squeezing their profit margins," wrote Hans Redeker, global head of FX strategy at Morgan Stanley.
* "It would therefore not be surprising to see capital spending plans slashed, which would translate into more moderate labour market conditions," he added.
* China on Friday criticised U.S. Secretary of State Mike Pompeo for fabricating rumours after he said the chief executive of China's Huawei Technologies Co Ltd [HWT.UL] has lied about his company's relationship with the Beijing government.[nL5N2301R7]
* Escalating trade tensions and weak economic data have fueled expectations of a Federal Reserve interest rate cut. Money markets are broadly expecting a reduction in borrowing costs in October, which would be followed by another cut in January 2020.
* The euro rose 0,24 percent to $1,121, benefiting from a weaker dollar and the Dutch part of EU parliamentary elections. An exit poll showed European Commissioner Frans Timmermans' Labour Party scored a surprise victory over a eurosceptic rival who was leading in the polls.
Source: Reuters
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