The dollar pulled back sharply against most rivals on Friday, stung by a surge in the US trade deficit to its widest level ever.
The surprising expansion in June's trade gap, far greater than economists had forecast, reawakened worries over structural weaknesses that face the greenback. Other data, including softer-than-expected wholesale inflation and consumer sentiment data, also burdened the dollar.
The health of the US economy and the funding of the US current account deficit, in particular, have returned to the forefront for currency investors in the US and abroad, traders said.
As a result, the dollar declined 1 percent or more against the euro, Swiss franc and British pound, while limiting its losses versus the yen. Weak Japanese economic data and concerns over the effect of record-high oil prices on Japan offset some of the otherwise dollar-negative sentiment.
The bulk of the selling came after the Commerce Department said that the US trade gap rose to US$55.82 billion in June from an upwardly revised shortfall of US$46.88 billion in May, as exports slipped and higher oil prices failed to cut energy imports.
Economists had anticipated a deficit of US$47.50 billion.
The euro was at US$1.2373 on Friday, up from US$1.2241 a day earlier. The dollar fell to 1.2382 Swiss francs from SF1.2569, while the pound rose to US$1.8443 from US$1.8222. The dollar was fetching ?110.57, down from ?110.89 late Thursday.
Meanwhile, the Canadian dollar surged to one of its biggest one-day gains ever on Friday. The greenback traded at C$1.3095, down from C$1.3318 late Thursday.
With the dollar's losses Friday, the US currency is perched close to the bottom of the recent ranges in which it has fluctuated all summer versus major currencies.
Market watchers said that the trade deficit report was an immediate negative for the dollar, and it also stokes longer-term worries about the massive trade deficit.
"In its way, the US June trade data are just as shocking from a surprise factor as the recent July payrolls report, providing a very timely reminder of the deteriorating balance-of-payments realities for the US dollar," said Rebecca Patterson, global currency strategist at J.P. Morgan in New York.
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to