Analysts are not attaching importance to today’s fall in the dollar, because other countries are also seeing early signs of an economic recession.

Dollar index    chart in 5 minute intervals

The US dollar fell against a basket of currencies on Friday after data showed US business activity contracted for the first time in nearly two years in July as a sharp slowdown in the services sector outweighed continued modest growth in manufacturing.

S&P Global said on Friday that its provisional – or „sudden” – US Composite Manufacturing PMI fell much more than expected to 47.5 this month from a final reading of 52.3 in June.

With a reading below 50 indicating contraction in business activity, this event is likely to spark a heated debate about whether the US economy is back in or close to recession after a sharp recovery following the early 2020 downturn in the early months of the COVID-19 pandemic.

Against a basket of currencies, the dollar fell 0.34% to 106.25.

The data reflects a decline in sentiment similar to that seen elsewhere in the world, said Bipan Rai, head of North American FX strategy at CIBC Capital Markets in Toronto.