Investing.com – The US dollar rebounded from recent lows and edged higher on Thursday ahead of a series of key economic data, while the euro fell.
As of 4:10 a.m. ET (9:10 a.m. GMT), the dollar index, which indexes the greenback against six other currencies, was trading up 0.2 percent at 101.182 after falling to a 13-month low of 100.51 earlier in the week.
Dollar recovers from lows
The dollar has recovered from recent lows, buoyed by its safe-haven status amid fears of renewed trade tensions between China and Western countries and growing geopolitical worries in the Middle East, Libya and Ukraine.
However, the greenback remains under pressure given the prospect of lower U.S. interest rates next month as the Federal Reserve is set to reverse the aggressive monetary tightening cycle that has supported the greenback for much of the past two years.
The dollar has fallen 2.9% so far this month and is on track to be its biggest monthly drop in nine months.
Attention will turn to more significant economic data later in the session, including weekly data and revised second-quarter gross domestic product data.
Initial data for the second quarter showed the U.S. economy remained strong, raising hopes that the world's largest economy was headed for a soft landing, but more recent data also points to a weakening labor market.
Price index data, the Fed's go-to inflation gauge, is due to be released on Friday and is likely to influence interest rate outlooks.
Slowing German inflation puts pressure on euro
In Europe, the index was trading down 0.4 percent at 1.1079 after preliminary data from German states showed domestic inflation fell this month, with the euro zone's overall figure also dropping.
Inflation in North Rhine-Westphalia, Germany's most populous state, fell to 1.7% in August from 2.3% in July, with similar drops seen in other states.
Germany will release its domestic figures later in the session before Friday's data, but gross domestic product (GDP) is expected to show a decline in August to 2.2 percent from 2.6 percent the previous month.
Policy makers began cutting rates in June and a sharp drop in inflation is likely to prompt them to do so again next month.
It was trading flat at 1.3188, not far from Tuesday’s high of 1.3269, the highest since March 2022.
Yen stabilizes after strong gains
In Asia, the index rose 0.1% to 144.72 after posting strong gains earlier in the week.
The yen strengthened on persistent expectations that the Bank of Japan will raise interest rates further this year after a series of hawkish signals from its officials. Japan's inflation data, however, somewhat contradicted the bank's forecast of a steady rise in inflation.
The yuan weakened 0.3% to trade at 7.1060 after a series of larger-than-expected midpoint rate revisions by the People's Bank of China.
But sentiment towards China remains gloomy due to fears of a trade war with Western countries, especially after Canada joined the United States and European Union in imposing heavy import tariffs on China's electric vehicle sector.
