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Dollar Loses Ground Against Rivals On Weak Economic Data

Dollar Loses Ground Against Rivals On Weak Economic Data

The U.S. dollar retreated after surging to a near 30-month high Tuesday morning, and edged lower as the day progressed as disappointing data on manufacturing activity in September raised prospects for a rate cut by the Federal Reserve.

The dollar index rose to 99.67, a 29-month high, but declined to 99.07 an hour after noon, and was last seen at 99.13, down 0.25% from previous close.

A report from the Institute for Supply Management showed a continued contraction in U.S. manufacturing activity in the month of September.

The ISM said its purchasing managers index dropped to 47.8 in September from 49.1 in August. Economists had expected the index to inch up to 50.1.

With the unexpected decrease, the index fell to its lowest level since hitting 46.3 in June of 2009, the last month of the Great Recession.

President Donald Trump blamed the weak manufacturing data on the Federal Reserve, which he blasted as “pathetic” in a post on Twitter.

“As I predicted, Jay Powell and the Federal Reserve have allowed the Dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected. Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!” Trump tweeted.

Against the Euro, the dollar was down 0.33% at 1.0937, after having strengthened to 1.0880 earlier in the day.

The euro area manufacturing sector contracted at the fastest pace in nearly seven years as output, new orders and purchasing fell sharply in September, final data from IHS Markit showed.

The final manufacturing Purchasing Managers’ Index dropped to 45.7 in September from 47.0 in August.

Meanwhile, Eurozone inflation eased unexpectedly in September, coming in at 0.9%, compared to 1% in August, flash data from Eurostat showed. Core inflation rose to a 3-month high of 1% from 0.9% in August. The rate came in line with expectations.

The Pound Sterling was up 0.1% at $1.2307, after opening at $1,2289 and retreating to $1.2205 in early on in the session.

The Japanese yen gained in strength against the greenback, trading at 107.70 a dollar, up 0.35% from previous close of 108.08 a dollar.

The dollar was down 0.14% against the loonie at 1.3222, and down 0.5% against Swiss franc at 0.9924. Swiss retail sales declined at the fastest pace in eleven months in August, data from the Federal Statistical Office showed on Tuesday. Retail sales declined a working day adjusted 1.4% year-on-year in August, reversing a 1.5% rise in July.

Against the Aussie, the dollar traded firm with the Aussie-Dollar pair quoting at 0.6704, following the Reserve Bank of Australia reducing its interest rates further as widely expected, on Tuesday.

The board of the Reserve Bank of Australia, governed by Philip Lowe, decided to reduce the cash rate by 25 basis points to 0.75%. The bank had earlier lowered its rate in June and July. The back-to-back rate cut in July was the first since mid-2012.

The material has been provided by InstaForex Company – www.instaforex.com