Forex Today: US Dollar struggles to find support as focus shifts to PMI data

Eren Sengezer FXStreet

Here is what you need to know on Thursday, August 22:

Following a recovery attempt seen in the first half of the day on Wednesday, the US Dollar Index turned south in the American session and closed the fourth consecutive day in negative territory. During the European trading hours on Thursday, preliminary August HCOB Manufacturing and Services PMI data from Germany and the Euro area, alongside the S&P Global/CIPS PMI figures, will be scrutinized by market participants. Later in the day, weekly Initial Jobless Claims, Existing Home Sales and S&P Global PMI data will be featured in the US economic docket.

US Dollar PRICE This week

The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the weakest against the New Zealand Dollar.

S&amp;P Global Composite PMI

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-1.12%	-1.13%	-1.56%	-0.74%	-1.07%	-1.84%	-1.68%
EUR	1.12%		-0.09%	-0.39%	0.40%	-0.04%	-0.90%	-0.60%
GBP	1.13%	0.09%		-0.46%	0.45%	0.05%	-0.74%	-0.51%
JPY	1.56%	0.39%	0.46%		0.75%	0.47%	-0.17%	-0.26%
CAD	0.74%	-0.40%	-0.45%	-0.75%		-0.35%	-1.03%	-0.98%
AUD	1.07%	0.04%	-0.05%	-0.47%	0.35%		-0.71%	-0.56%
NZD	1.84%	0.90%	0.74%	0.17%	1.03%	0.71%		0.18%
CHF	1.68%	0.60%	0.51%	0.26%	0.98%	0.56%	-0.18%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

The US Bureau of Labor Statistics announced on Wednesday that the preliminary estimate of the benchmark revision indicates an adjustment to March 2024 total Nonfarm employment of -818,000 (-0.5%). Later in the day, the minutes of the Federal Reserve's (Fed) July 30-31 policy meeting showed that a vast majority of policymakers believed that if incoming data continued to meet expectations, it would likely be appropriate to ease policy at the next meeting. The USD Index was last seen moving in a tight channel slightly above 101.20, already down more than 1% since the beginning of the week. Meanwhile, US stock index futures trade marginally lower on the day and the benchmark 10-year US Treasury bond yield stays near the lower limit of its weekly range at around 3.8%.

During the Asian trading hours, the data from Australia showed that the Judo Bank Composite PMI improved to 51.4 in August's flash estimate from 49.9 in July. This reading failed to trigger a noticeable reaction in AUD/USD, which continues to move sideways at around 0.6750.

EUR/USD climbed above 1.1170 on Wednesday and touched its highest level since July 2023 before going into a consolidation phase early Thursday. At the time of press, the pair was virtually unchanged on the day at 1.1150.

GBP/USD preserved its bullish momentum on Wednesday and advanced beyond 1.3100 for the first time in over a year. The pair stays slightly below this level in the European morning on Thursday.

USD/JPY failed to benefit from the selling pressure surrounding the USD and closed the day flat on Thursday. The pair extends its sideways grind at around 145.50 to begin the European session.

Gold corrected from the record-high it set at $2,531 on Tuesday but managed to stabilize above $2,500 late Wednesday. XAU/USD stays relatively quiet and trades at around $2,510 early Thursday.

Economic Indicator

S&P Global Composite PMI

The S&P Global Composite Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging US private-business activity in the manufacturing and services sector. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the private economy is generally expanding, a bullish sign for the US Dollar (USD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for USD.

AUD/USD hits nine-week lows below 0.7000 on RBA Bullock's remarks

AUD/USD reverses a brief uptick and turns lower to hit nine-week lows below 0.7000 in the European morning on Tuesday, as traders digest cautious remarks from Reserve Bank of Australia (RBA) Governor Michele Bullock during the press conference. Earlier on, the RBA raised the cash rate to 4.60%, as widely expected, leaving the door open to further rate hikes if needed.

USD/JPY consolidates near 157.50 as a bullish USD counters intervention risks

USD/JPY struggles to capitalize on the overnight bounce from a one-week low, consolidating around 157.50 in the Asian session on Tuesday. Trump's concerns about the Japanese Yen's weakness fueled speculation about another US-Japan joint intervention. This, along with the hawkish BoJ, underpins the JPY and caps the currency pair. Meanwhile, rising Fed rate-hike bets and oil-driven inflation fears continue to push US bond yields to multi-year highs, keeping the US Dollar pinned near a two-month high and supporting the pair.

Gold regains some traction; focus remains on $4,100

Gold manages to gather some composure and bounces off recent lows near the key $4,100 mark per troy ounce on Tuesday. The move higher in the precious metal comes despite the firmer US Dollar and rising US Treasury yields across the board, while escalating geopolitical tensions appear to limit the downside potential.