US second-quarter gross domestic product contracted at a 0.9% annualized rate, according to the Commerce Department’s advance estimate, released Thursday.Money markets currently give 76% odds that the Fed will slow the pace of rate hikes to half a point at the next meeting in September, against a 14% probability for a third consecutive 75 basis-point increase.
“Lower yields and positive risk sentiment is tried and trusted recipe for a softer USD,” although that weakness has been “flattered” by an outsized rally in the yen, Ray Attrill, the head of FX strategy at National Australia Bank in Sydney, wrote in a client note. Fed Chair Jerome Powell said on Wednesday he did not think the United States was in a recession, based on the strength of the jobs market.
Meanwhile, the euro was flat at $1.01945 after a see-saw session on Thursday that ultimately ended with it little changed.The International Monetary Fund has warned that if Russia, which reduced gas delivery to Europe this week, completely cuts off supplies by year-end, the region could face zero economic growth next year.