Dollar Holds Decline on Weak PMI Data

The dollar index held around 105.6 on Wednesday after losing 0.4% in the previous session, weighed down by cooling US private sector growth which supports the case for Federal Reserve interest rate cuts.

Data showed that US business growth slowed and signaled only a slight expansion in April as both manufacturing and services activities eased.

The greenback also came under pressure from a rebound in the euro and sterling amid robust Eurozone and British business activity data.

Moreover, the US dollar weakened against the aussie as stronger-than-expected Australian inflation data bolstered expectations that the Reserve Bank of Australia will not cut rates soon.

Investors now look ahead to US GDP data on Thursday and the Fed-preferred PCE price index report on Friday to better guide the monetary policy outlook.