Dollar slips as data shows US economy near stalling point

NEW YORK: The US dollar fell against a basket of currencies on Wednesday after data showed US business activity approached the stagnation point in August, with growth at its weakest since February as demand for new business in the vast service sector contracted.

S&P Global said its flash US Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 50.4 in August from 52 in July, the biggest drop since November 2022.

Michael Brown, market analyst at Trader X, said the data does “rather threaten the ‘US exceptionalism’ narrative that the market has been trading on for the last couple of weeks.” For months, a strong labor market and resilient consumer spending have increasingly assuaged fears of recession, and led to upward revisions of GDP growth forecasts. But Wednesday’s data painted a more tepid picture about the economy. The US dollar index - which measures the currency against six major counterparts - was down 0.06% at 103.53.

The pound was last down 0.39% at $1.2682.

Meanwhile, the dollar fell 0.8% against the yen to a more than 1 week low of 144.725 yen, pulling away from the nine-month high of 146.565 touched last week, leaving traders on tenterhooks as they warily watch for any signs of intervention.

The spot yuan opened at 7.2870 per dollar on Wednesday and was last changing hands at 7.2794.