Dollar fell in American trade on Monday against a basket of major rivals, moving away from eight-week highs on profit-taking as haven demand slows down following the initial round of the French parliamentary elections.
The decline comes ahead of important US industrial data for June, which could provide important clues on the health of the US economy.
The Price
The dollar index fell 0.4% today to 105.42, with a session-high at 105.85.
The index lost 0.1% on Friday, the second loss in a row away from eight-week highs at 106.13.
The dollar is also still hurting after weak US personal spending data last week.
The dollar index rose 1.2% in the second quarter as the Federal Reserve maintained its interest rates high for an extended duration.
Alternative Demand
Dollar’s appeal as an alternative demand fizzled out after the relief of the French Parliamentary elections this week.
The initial round in France’s parliamentary elections showed the far right group “National Front” leading by a less than expected margin at 33.5%.
The leftist coalition got 28.1% of the vote, while the Macron’s Centrist “Together” coalition got 20.7%.
An overwhelming victory by the National Front would’ve threatened the implication of aggressive and expansionary financial policies in a country that already suffers from a heavy deficit.
US Rates
According to the Fedwatch tool, there’s a 63% chance of a September rate cut by the Federal Reserve, and a 76% chance of a Fed rate cut.
US Industrial Sector
Now investors await important US industrial data later today, mainly the ISM manufacturing PMI, expected at 49.2 in June, up from 48.7.
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