The dollar declined on Friday as US economic data continued to raise doubts about monetary policy as well as the health of the economy.
A slight dollar bounce in reaction to the concurrent release of reports on the US trade deficit for July and the producer price index last month was quickly usurped by a dollar sell-off.
The deficit wasn't quite as vast as expected, while PPI declined unexpectedly. Both reports ultimately weighed on the US currency. In morning trading following the release of the figures, the euro tested a new range above US$1.2300 after breaking through US$1.2270.
But as trading wound down, the US currency managed to win back some of its intraday losses, primarily due to last-minute positioning ahead of the weekend.
Late Friday, the euro was at US$1.2267, up from US$1.2192 late Thursday. The dollar was at ¥109.55, down from ¥109.81. The pound was at US$1.7965, up from US$1.7827, while the dollar was at 1.2573 Swiss francs, down from SF1.2639.
The PPI for last month showed that US wholesale prices declined slightly by 0.1 percent in the month as prices of gasoline, food and automobiles dropped. The core index, which excludes food and energy, fell 0.1 percent.
The data, though a slight surprise to a market that expected a PPI uptick of 0.2 percent, were consistent with Federal Reserve Chairman Alan Greenspan's recent comments that the risk of inflation has abated. Some analysts felt the PPI figure undermined chances for a series of Fed rate hikes this year, which would be dollar-supportive as US assets would become more attractive for investors.
The other data release of the morning, the US deficit in international trade in goods and services, narrowed to US$50.15 billion in July, the Commerce Department reported.
This followed a record deficit of US$55.02 billion in June, which was revised down from the originally reported US$55.82 billion. The July deficit was the second-highest on record, Commerce said.
"The trade number came in slightly better than anticipated, but it's still 50-plus billion [dollars] and you have to be careful about jumping for joy over this," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is