The dollar is turning in a mixed performance on the first trading day of the new year. The U.S. currency is holding onto early gains against its major European rivals, but is down in comparison to the Japanese Yen.
Investors are flocking to safe havens on Monday, like gold and the Japanese Yen, due to a sharp sell-off in global equity markets. The drop in equities was spark by a sharp sell-off in the Chinese stock market, due to a weaker than expected Chinese manufacturing report. After falling close to 7 percent, trade in the Chinese market was halted for the rest of the day, due to a newly launched circuit breaker mechanism that kicked in for the first time.
Meanwhile, indicating a second consecutive month of contraction in U.S. manufacturing activity, the Institute for Supply Management released a report on Monday unexpectedly showing a drop by its manufacturing index in the month of December.
The ISM said its purchasing managers index edged down to 48.2 in December from 48.6 in November. The modest drop came as a surprise to economists, as the consensus estimate called for the index to inch up to a reading of 49.2.
Construction spending in the U.S. unexpectedly decreased in the month of November, according to a report released by the Commerce Department on Monday. The report said construction spending fell 0.4 percent to an annual rate of $1.123 trillion in November from the revised October estimate of $1.127 trillion. Economists had expected spending to rise by 0.7 percent.
The dollar jumped to a 2-week high of $1.0780 against the Euro Monday morning, but has since eased back to around $1.0825.
Eurozone manufacturing activity expanded at the fastest pace since April 2014, final survey data from Markit showed Monday. The final manufacturing Purchasing Managers’ Index rose to 53.2 in December from 52.8 in November. The flash score was 53.1.
Germany’s manufacturing sector expanded more than initially estimated in December, final data from Markit showed Monday. The Markit/BME manufacturing Purchasing Managers’ Index rose to 53.2 in December from 52.9 in November. The reading signaled the strongest improvement in the sector for four months. The flash PMI reading was 53.
Germany’s consumer prices rose for a third straight month in December, but the pace of increase eased, defying expectations for an acceleration, preliminary data from Destatis showed Monday. The consumer price index climbed 0.3 percent year-on-year following 0.4 percent increase in November, which was the fastest pace in six months. Economists had expected a 0.6 percent gain.
German employment growth, which has lasted over a decade, continued in 2015 with the number of those with jobs setting a reunification-high, largely helped by a resilient economy and immigration of foreign workers.
The number of residents in employment rose by 324,000 persons or 0.8 percent to 43 million last year, provisional data from Destatis showed Monday. The pace of increase slowed slightly from the 0.9 percent registered in the previous year.
Meanwhile, the number of unemployed fell by 140,000 persons or 6.7 percent to 1.95 million. The figure fell below 2 million for the first time since the German reunification.
The ILO unemployment rate declined to 4.3 percent from 4.7 percent, which was just below the EU average rate.
France’s manufacturing sector activity expanded less than initially estimated in December, final data from Markit showed Monday. The manufacturing Purchasing Managers’ Index rose to 51.4 in December from 50.6 in November. It was the highest reading since March 2014 but below the flash score of 51.6.
The buck climbed to a high of $1.4662 against the pound sterling Monday, but has since slipped to around $1.4710.
The U.K. manufacturing sector growth eased unexpectedly in December, due to a further slowdown in growth of output and new orders, survey data from Markit Economics showed Monday.
The Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index for manufacturing fell to 51.9 in December from 52.5 in the previous month. Economists had expected the index to improve to 53.0.
U.K. mortgage approvals rose to a 3-month high in November, the Bank of England reported Monday. The number of mortgages approved for house purchases rose to 70,410 in November from 69,867 in the prior month. It was forecast to rise to 69,900. It was the highest level since August.
The greenback sank to over a 2-month low of Y118.693 against the Japanese Yen Monday, but has since rebounded to around Y119.315.
The material has been provided by InstaForex Company – www.instaforex.com