Forex Today: Profit taking halts dollar’s rally

What you need to take care of on  Wednesday, August 24:

The greenback turned south after extending its rally throughout the first half of the day, ending the day down against most major rivals. The catalyst was dismal US data,  as the US Services S&P Global PMI contracted to 44.1. At the same time, the manufacturing index expanded at a slower-than-anticipated pace, with the index down to 51.3 from 52.2 in July.

However, S&P Global PMIs for most major economies indicated slowing economic progress and even contraction, indicating it is a global issue. The greenback recovered some ground ahead of Wall Street’s close as risk-off flows continue. The dollar’s decline seems corrective amid extreme overbought conditions. Tepid US data helped investors book some profits, but there are no signs of a trend change.

ECB Executive Board member Fabio Panetta painted a gloomy picture. He said that the central bank might need to adjust the monetary policy further as the probability of a recession increases. Meanwhile, speculative interest is slowly but steadily increasing bets of a US Federal Reserve 75 bps rate hike in September.

GBP/USD hovers around 1.1830, while AUD/USD stands in the 0.6920 region. The USD/CAD pair fell sharply and finished the day at 1.2950.

Safe-haven currencies posted gains vs the greenback, with USD/CHF hovering at around 0.9640 and USD/JPY trading at  136.77.

Gold is currently trading at $1,7477 a troy ounce, up for the day, while crude oil prices extended their latest advance amid market talks suggesting OPEC+ may cut back production. WTI is now at $93.60 a barrel.

 The macroeconomic calendar will remain empty in Asia, with the focus on US Durable Goods Orders on Wednesday.