US Dollar Higher Against Majors
During Thursday’s early Asian deals, the US dollar showed strength against its major counterparts.
Wall Street ended with modest gains yesterday amid low volumes. While the data on manufacturing activity and pending home sales fell in line with expectations and resulted in an early surge, weak employment and construction spending data hurt sentiment to an extent and wiped off some early gains.
The Dow closed up by 57.06 points at 8,504, the Nasdaq rose by 10.68 points to 1,846, and the S&P 500 advanced by 4.01 points to 923.
The Institute for Supply Management released a report yesterday showing a continued contraction in manufacturing activity in the month of June, the pace of contraction slowed from the previous month amid some encouraging signs for the sector. The ISM said its index of activity in the manufacturing sector rose to 44.8 in June from 42.8 in May, with a reading below 50 indicating a contraction in the sector. The index came roughly in line with the expectations of economists, who forecast a reading of 44.6.
Separately, housing industry group NAR said its pending home sales index rose 0.1 percent to 90.7 in May from an upwardly revised reading of 90.6 in April. Economists had been expecting the index to come in unchanged compared to the 90.3 originally reported for the previous month.
The day’s optimism was mitigated by data from the U.S. Commerce Department revealing that construction spending fell 0.9 percent in May following a revised 0.6 percent increase in the previous month. Economists had expected construction spending to fall by 0.6 percent compared to the 0.8 percent increase that was originally reported for April.
Meanwhile, ADP said that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.
Against the European currency, the US dollar edged higher during early Asian deals on Thursday. At 10:25 pm ET, the dollar reached a high of 1.4103 versus the euro, compared to 1.4143 hit late New York Wednesday. The next upside target level for the greenback is seen around 1.424.
The US currency that closed Wednesday’s North American session at 1.6481 against the British pound hit a high of 1.6454 at 11:20 pm ET. The pound-dollar pair is currently trading at 1.6459 with 1.621 seen as the next target level.
The US dollar gained ground after hitting a low of 96.39 against the Japanese yen during Thursday’s early Asian deals. At 10:40 pm ET, the dollar-yen pair climbed to 96.73, compared to Wednesday’s closing value of 96.67. If the pair gains further, 97.2 is seen as the next target level.
The monetary base in Japan expanded by 6.4 percent on year in June, the Bank of Japan said on Thursday, standing at 93.639 trillion yen. That follows a 7.9 percent gain in May and an 8.2 percent increase in April.
The amount of money spent on construction fell more than expected in May, halting a recent rebound. A drop in homebuilding contributed to the decline.
Against the Swiss franc, the greenback traded higher during today’s early Asian trading. The dollar-franc pair that closed Wednesday’s New York deals at 1.0752 advanced to 1.0782 at 10:25 pm Eastern Time. On the upside, 1.089 is seen as the next target level for the dollar.
The Euro-zone May unemployment rate and PPI, U.K. construction PMI report for June are expected in the European session today.
At 7:45 am ET, the European Central Bank is scheduled to announce its interest rate decision. Analysts expect the ECB to keep rates steady at a record low of 1%.
Across the Atlantic, the U.S. Labor Department is due to release its customary weekly jobless claims report for the week ended June 27th at 8:30 am ET.
At the same time, the Labor Department is scheduled to release its monthly non-farm payroll report. Economists estimate that the U.S. economy lost 370,000 jobs in June and look for an unemployment rate of 9.6%.
The Commerce Department is due to release its report on factory goods orders for May at 10 am ET. Orders for manufactured goods are likely to have increased 0.2% in the month.
