The US Dollar (USD) strengthened against the Pound (GBP), Euro (EUR) and other major peers on Monday following the release of better than forecast US manufacturing data.
Earlier in the session, the Pound had been trading firmer against the ‘Greenback’ after the latest Markit compiled manufacturing purchasing managers index (PMI) for the UK came in better than forecast.
The Euro however continued its slide after the latest PMI data out of the Eurozone came in below economist forecasts.
Following the release of the Markit compiled Eurozone PMI data the Euro declined to its lowest level in nearly two years. The PMI fell to a reading of 50.7 in October, down from the previous month’s figure of 50.6.
Economists had forecast for the figure to remain unchanged.
The US Dollar found support after the latest Institute for Supply Managements (ISM) factory index increased more than expected in October. The index rose to a reading of 59, matching August as the best level since March 2011.
The data exceeded economist expectations for a igure of 56.2.
‘Many people have focused or been worried about the weakness in Europe and the global economy and have been fearful we were going to see this huge hit in exports. We have been in this long recovery process and we still have pretty good momentum in domestic demand. That’s really the driving force,’ said Scott Brown, a chief economist.
The ISM also released its gauge of production, which advanced to 64.8 from the preceding month’s figure of 64.6, the best level seen since May 2004.
The new orders measure also soared from the prior month to climb to 65.8 the second highest increase recorded since August 2009.
The gauge of employment also exceeded expectations by recovering to 55.5 in October.
A reading above 50 indicates expansion in the manufacturing sector.
US Dollar Exchange Rate Forecast
The USD/GBP exchange rate could see some volatility on Tuesday if the latest UK Construction PMI data adds to Monday’s positive manufacturing report.
Data out of the USA will include the latest chain store sales, monthly factory orders and balance of trade.
More strong figures and we can expect the ‘Greenback’ to continue making gains against its most traded peers.
As for the Euro, attention will be focused on Tuesday’s Eurozone PPI data. More signs of prices falling and the Euro will weaken, as fears over deflation are sure to rise.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6260 ,
US Dollar,,Euro,0.8010 ,
US Dollar,,Canadian Dollar,1.1311 ,
US Dollar,,Australian Dollar,1.1488 ,
Pound Sterling,,US Dollar,1.5974 ,
Euro,,US Dollar,1.2488 ,
[/table]
