The dollar rose on Friday, backed by caution over risks to the global economy. In addition, the pound and the euro showed weakness compared to domestic indicators, and in the case of the former, after the UK government presented a stimulus plan that would increase the country’s indebtedness.
Late afternoon in New York, the dollar rose to 143.32 yen, the euro slipped to $0.9691, and the pound fell to $1.0875. The DXY index rose 1.65% to 113,192 points, up 3.12% on a weekly basis.
In Europe, the UK government announced a package of tax cuts to boost the economy, which is facing the highest inflation rate in nearly four decades. Capital Economics says there may be some support for growth, but it has warned of higher interest rates and the country’s debt. On the indicators docket, the UK’s composite PMI fell to 48.4 on September 1, the lowest level in 20 months. With the local government package, the pound reached its lowest level since 1985.
In the Eurozone, the Composite PMI fell to 48.2 in the September preview, also a 20-month low. For Oxford Economics, the data suggests the region will go into recession in the local winter, with Germany even worse off, given the jumps in energy prices. In turn, Fitch emphasized in its analysis that the energy crisis and the reactions of Western European governments to the problem increase the financial risks in the region. In this context, the euro today recorded its lowest level since 2022.
The dollar continues to receive support from the Federal Reserve’s stance of tightening monetary policy to combat inflation. At today’s event, Federal Reserve Chairman Jerome Powell confirmed that the institution intends to use “every tool” available for this purpose.
