The dollar failed to rally versus other majors on Friday, after Standard & Poor’s placed the “AAA” long-term and “A-1” short-term sovereign credit ratings on the U.S. on “CreditWatch” with negative implications.
The agency said there is a 50/50 chance that it could lower the long term rating within the next 90 days due to the dynamics of the political debate on the debt ceiling.
Lawmakers have until August 2 to raise the nation’s borrowing limit, but Republicans appear ready to test the bond markets by not agreeing to do so.
The dollar was steady near $1.4150 versus the euro, after drifting slightly higher overnight.
Losses earlier in the week took the dollar to a 4-month low of Y78.45 versus the yen, but the pair was deadlocked at Y79.15 today.
The buck firmed a bit to $1.6115 versus the sterling, having come well off a 6-month high near $1.5775 set back on Monday.
Late morning losses took the dollar to a 2-month low of C$0.9512 against its Canadian counterpart.
A barrage of U.S. economic data failed to budge currencies.
With Americans getting some relief at the pump, overall consumer inflation figures fell in June, according to a report released Friday by the Labor Department.
The Consumer Price Index dropped 0.2 percent for the month, the first monthly decrease in the inflationary pressure faced by U.S. households since June 2010, though most economists had predicted the fall. Energy prices overall continued to drive the drop in consumer prices, with gasoline prices falling sharply by 6.8 percent.
Conditions for New York manufacturers unexpectedly deteriorated for a second consecutive month in July, according to a report released by the Federal Reserve Bank of New York on Friday, although the pace of contraction slowed compared to the previous month. The New York Fed said its general business conditions index rose to a negative 3.8 in July from a negative 7.8 in June, but a negative reading indicates a contraction in activity.
Eurozone trade gap narrowed in May as export growth accelerated, official figures revealed Friday.
The trade deficit declined to EUR 0.6 billion from EUR 2.5 billion in April, data released by the European Union statistical agency Eurostat showed.