The U.S. dollar exchange traded fund slid below its short-term trend line, with the greenback depreciating to its lowest since June, as traders reduced bets on Federal Reserve action in light of weakening U.S. economic data.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) fell 0.2% Friday and was testing its support at the 50-day simple moving average. UUP tracks the price movement of the U.S. dollar against a basket of currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.
Meanwhile, the U.S. Dollar Index (DXY), which tracks the USD against a basket of major global currencies, also dropped 0.2% to 95.7.
The greenback declined against most major currencies after retail sales unexpectedly fell off last month while wholesale prices showed a surprise drop, Bloomberg reports.
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Investors have been keeping an eye on economic data to gauge whether or not the economy is healthy enough for the Fed to hike interest rates this year, which would help strengthen the U.S. dollar. However, weak U.S. growth and productivity data have made investors more skeptical of any hikes this year.
[related_stories]Currency traders turned bearish on the dollar as Federal-funds futures showed a 40% chance the Fed would lift rates this year, down from 50% earlier this week, according to CME Group data.
“Two weeks ago, we had GDP and we thought ‘lights out’ – and then we had the payrolls, and the lights turned back on again, and now it’s lights out again,” Steven Englander, global head of Group-of-10 currency strategy at Citigroup Inc., told Bloomberg.
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Looking ahead, traders will have to wait for Fed Chair Janet Yellen’s comments later this month at the meeting of global policy makers in Jackson Hole, Wyoming to find any more guidance on the central bank’s outlook. The Fed will release its next policy decision on September 21.
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PowerShares DB U.S. Dollar Index Bullish Fund