The dollar is gaining ground against all of its major competitors Friday, as it attempts to bounce back from recent weakness. Trading activity has been on the light side at the end of the trading week, due to closure of many global equity markets for holidays.
Today’s gains in the dollar are being driven by a batch of U.S. economic data that, while slightly below expectations, were not quite as weak as investors have become accustomed to of late.
Economic activity in the U.S. manufacturing sector continued to expand in the month of April, according to a report released by the Institute for Supply Management on Friday, although the index of activity in the sector unexpectedly held steady.
The ISM said its purchasing managers index came in at 51.5 in April, unchanged from the reading reported for the previous month. A reading above 50 indicates continued growth in the manufacturing sector, but economists had expected the index to edge up to 52.0.
Consumer sentiment in the U.S. saw a modest improvement in the month of April, according to a report released by the University of Michigan on Friday. The report said the consumer sentiment index for April came in at 95.9, unrevised from the mid-month reading and up from 93.0 in March. Economists had expected the index to be upwardly revised to 96.0.
Partly reflecting a sharp pullback in spending on residential construction, the Commerce Department released a report Friday morning showing an unexpected decrease in U.S. construction spending in the month of March.
The report said construction spending fell by 0.6 percent to annual rate of $966.6 billion in March from the revised February estimate of $972.9 billion. The decrease came as a surprise to economists, who had been expecting construction spending to increase by about 0.5 percent.
The dollar has been losing ground against the Euro for the past 3 weeks and sank to over a 2-month low of $1.1289 in early trade. The U.S. currency has since bounced back to around $1.12.
The buck slipped to an early low of $1.5396 against the pound sterling Friday, but has surged to a 1-week high of $1.5145 this afternoon.
British manufacturing activity unexpectedly eased sharply to a seven-month low in April amid weaker demand, while central bank data showed that consumer credit grew strongly, suggesting that the fragile economic recovery was largely being led by consumption.
Poor figures for the factory sector coupled with weaker-than-expected first quarter GDP may prove a severe blow to the Conservatives just days ahead of the May 7 election.
The seasonally adjusted Markit/CIPS Purchasing Managers’ Index fell to 51.9 in April from March’s 54, which was revised from 54.4. Economists had expected the index to rise to 54.6.
U.K. mortgage approvals unexpectedly declined in March, after rising in the previous three months, data from the Bank of England showed Friday. The number of loan approvals for home purchase fell to 61,341 from a six-month high of 61,523 in February. Economists had expected a higher figure of 62,500.
The greenback has extended its gains against the Japanese Yen to a third straight session and has broken out to a 3-week high of Y120.230 this afternoon, from a low of around Y118.490 yesterday.
The manufacturing sector in Japan slipped into contraction for the first time in nine months, the latest survey from Markit Economics showed on Friday with a revised manufacturing PMI reading of 49.9. That’s up from last month’s preliminary April reading of 47.7, although it’s down from 50.3 in March.
Consumer prices in Japan gained 2.3 percent on year in March, the Ministry of Internal Affairs and Communications said on Friday. That exceeded forecasts for 2.2 percent, which would have been unchanged from the February reading.
The unemployment rate in Japan came in at a seasonally adjusted 3.4 percent on year in March, the Ministry of Internal Affairs and Communications said on Friday. That beat forecasts for 3.5 percent, which would have been unchanged from the February reading.
The average of household spending in Japan was down 10.6 percent on year in March, the Ministry of Internal Affairs and Communications said on Friday, standing at 317,579 yen. That beat forecasts for a decline of 11.8 percent following the 2.9 percent drop in February.
The material has been provided by InstaForex Company – www.instaforex.com