The US Dollar Exchange Rate was trading in the region of 0.7392 against the Euro as of 16.23 pm
The string of seemingly lacklustre US data releases got longer today as the ISM Services Gauge revealed that growth in US service industries is slowing.
Although the result came in slightly above economists’ expectations, at 55.2 rather than 55.0, it’s still a decline from December’s 55.7 – the most impressive level achieved for 10 months.
The current level might be significantly above the average of 53.5 seen since the end of the US recession three and a half years ago but the Institute for Supply Management – who compiled the non-manufacturing index – revealed that while eight non-manufacturing industries (which includes sectors like real estate and construction) posted growth last month nine others experienced contraction.
Meanwhile the gauge of business activity fell from 60.8 to 56.4 and the measure of new orders dropped from 58.3 to 54.4.
However, industry experts are expecting the pickup in manufacturing, housing rebound and steadying levels of consumer spending to propel service industries, which are responsible for roughly 90 per cent of US GDP, forward in the months ahead.
Last week the Institute for Supply Management’s factory gauge hit a nine month high and prior to the release of the report a senior economist with New York-based Societe Generale asserted: ‘The expansion in services will continue. Consumer spending is growing, housing is improving the job market’.
However, it still isn’t smooth sailing ahead. The fiscal cliff may have been sidestepped but the higher taxes agreed by US policy makers will still have a significant effect on individual pay checks, while in less than a month a series of automatic spending cuts will begin.
As one industry expert commented, things might be showing signs of improvement but with federal budget negotiations ongoing: ‘Any optimism that we have about the economy … will be tempered until we see what happens to consumer confidence and spending’.
The report also revealed that the ISM employment gauge achieved 57.5, an improvement of 2.2 and not far off a seven month high.
Although the British Pound advanced against the US Dollar this morning, following improved optimism regarding the likelihood of the UK entering a triple-dip recession, the gains were swiftly shed as trade progressed.
Against the Euro the ‘Greenback’ experienced fluctuations as a result of a mixed news day for the Eurozone. After gaining and losing 0.4 per cent against the ‘Greenback’ the Euro currently stands little changed. Although retail sales for the 17-nation currency bloc declined by more than expected, potential Euro losses were offset by stronger-than-forecast services PMI and a more positive looking balance sheet for the European Central Bank. The Euro’s movement was also affected by comments made by the French President Francois Holland, specifically his announcement that: ‘We can’t let the Euro fluctuate according to the mood of the market.’
Ian Stannard, head of European foreign-exchange strategy with Morgan Stanley has now put forward his view that the Euro could sink to 1.3350 US Dollars over the next two days (as investors await the outcome of Thursday’s influential European Central Bank meeting) but may well come back fighting, perhaps achieving as much as 1.40 US Dollars in the weeks which follow. Stannard was quoted as saying: ‘The final PMI readings for Europe were obviously on the stronger side of expectations, so that had provided a bit more of a boost for the Euro. The underlying trend in the Euro is still up, but we need to be cautious going into the ECB meeting’.
Meanwhile, news that the Bank of Japan’s Governor Masaaki Shirakawa will resign from his post three weeks early led to the Yen taking heavy losses. The safe-haven currency shed 0.8 per cent against its American counterpart, dropping as low as 93.13 Yen per Dollar.
Rising crude oil futures also caused the US Dollar to lose ground against its Canadian counterpart.
Current US Dollar Exchange Rates
The US Dollar to Euro exchange rate is currently trading at 0.7392
The US Dollar to Pound Sterling exchange rate is currently trading at 0.6372
The US Dollar to Canadian Dollar exchange rate is currently trading at 0.9976
The US Dollar to Australian Dollar exchange rate is currently trading at 0.9643
The US Dollar to New Zealand Dollar exchange rate is currently trading at 1.1874
The US Dollar to Emirati Dirham exchange rate is currently trading at 3.6729
The US Dollar to Swiss Franc is currently trading at 0.9088
The US Dollar to Japanese Yen exchange rate is currently trading at 93.2500
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