The US Dollar fell against the majority of peers after the latest manufacturing PMI data disappointed but found some support from a better-than-expected jobless claims report. The Canadian Dollar meanwhile tumbled beyond a 3-year low against Sterling and fell to a one-week low against the ‘Greenback’.
Manufacturing in the world’s largest economy grew at its slowest pace in a year in October according to data compiled by financial data firm Markit. Factory output meanwhile contracted for the first time since 2009, increasing investor concerns over a slowdown in the global economy.
The manufacturing PMI fell to 51.1 in October, the lowest reading recorded since 2012 and down from the 52.8 in September. Factory output contracted to 49.5 from the previous months reading of 55.3. A figure below 50 indicates contraction, above 50 marks expansion.
The 16-day long government shutdown earlier in the month is being blamed for the poor data and is the main reason for the US Dollars weakness against the Euro, whom investors now perceive as a more stable option than the ‘Greenback’. Expectations that the fiscal impasse over the federal budget and debt ceiling will emerge again in January has kept investors away from the US currency.
“It is impossible to disentangle the impact of the shutdown from other factors that might have been at play during the month, but the surveys do suggest that the disruptions and uncertainty caused by the crisis hit companies hard” said Markit chief economist Chris Williamson.
As a result of the negative data the US Dollar resumed its decline against the resurgent Euro by falling to a two-year low. Expectations that the Federal Reserve will postpone making any cuts to its $85 billion per month monetary easing policy until 2014 has weighed heavily upon the Dollar at the expense of other currencies.
Other data released on Thursday added to the currency’s woes. The latest continuing claims data showed that the number of Americans filing for jobless benefits fell less than expected last week
The Washington based Labour Department said that the number of claimants was adjusted to 350,000, a weekly fall of 12,000. Economists had been expecting a reduction to 340,000 as technical problems in California distorted the data for a second month.
“The lack of progress on the jobs front is that we are not seeing dynamic hiring,” said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut. “The pace of layoffs is pretty restrained and consistent with lower unemployment. There are just not enough net jobs being added.”
Thursday also saw the release of the latest trade deficit data for the US. According to the Commerce Department the trade gap was little changed in August as imports and exports both declined. The weakening in exports adds to fears that the global economy is slowing down.
The Dollar is expected to end the week making a loss against the Euro if Friday’s Durable goods orders follow the week’s pattern of coming in worse than forecast.
US Dollar (USD) Current Exchange Rates
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6176
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7253
The US Dollar/ Canadian Dollar Exchange Rate is currently in the region of: 1.0395
The US Dollar/ Australian Dollar Exchange Rate is currently in the region of: 1.0388
The US Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1940
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.3858
The US Dollar/ South African Rand Exchange Rate is currently in the region of: 9.7668
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6191
The Euro/ US Dollar Exchange Rate is currently in the region of: 1.3787
(Correct as of 15:10 pm GMT)
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