Dollar’s Slip on Data Release; Bitcoin Eases Off After Hitting Highs
On Tuesday, the dollar saw a minor decline against a basket of currencies as reports indicated a slowdown in the growth of the U.S. services industry. Investors were gearing up for a busy week, marked by a European Central Bank rate decision, congressional testimony from Federal Reserve Chair Jerome Powell, and U.S. jobs data.
Bitcoin, the world’s largest cryptocurrency, achieved a record high before undergoing a sharp retreat in a volatile session. This year, its impressive 50% surge has been driven by investors directing funds into U.S. spot exchange-traded crypto products and the anticipation of a global decrease in interest rates. Bitcoin, reaching as high as $69,202, later declined by 7.04% to $62,745.23.
The Institute for Supply Management (ISM) reported a slight deceleration in U.S. services industry growth in February, which was attributed mainly to a decline in employment. Additionally, separate data revealed a more significant-than-expected drop in new orders for U.S.-manufactured goods in January. Stuart Cole, Chief Economist at Equity Capital, expressed concerns about the U.S. economy, stating, “The ISM numbers today showed growth in the service sector slowed in February, in no small part due to a decline in employment levels.”
The dollar index, measuring the dollar against six major peers, showed a marginal decline of 0.04% to 103.8. Most major currency pairs traded within familiar ranges, reflecting the subdued nature of the G10 FX world, as Michael Brown, a Market Analyst at online broker Pepperstone in London noted. Brown attributed the lack of conviction in trading to upcoming events, including Powell’s testimony, the ECB decision, and the nonfarm payrolls report on Friday.
Despite a 2.3% increase for the year, driven by better-than-expected U.S. economic data, the dollar index’s recent rally has stalled as investors await clarity on Federal Reserve policy. Powell is expected to emphasize the Fed’s stance of waiting for more data before considering any rate cuts during his testimony to Congress on inflation and the economy on Wednesday and Thursday.
