The dollar is losing ground against its major rivals Monday afternoon. The mood among investors has turned cautious at the start of the new trading week. Disappointing manufacturing data from China has brought concerns over the health of the world’s second largest economy back to the forefront. Economic data from the United States also proved underwhelming this morning.
U.S. manufacturing activity contracted for the fourth straight month in January, according to a report released by the Institute for Supply Management, although the index of activity in the sector did show a slight increase.
The ISM said its purchasing managers index inched up to 48.2 in January from a downwardly revised 48.0 in December, but a reading below 50 continues to indicate a contraction in manufacturing activity. Economists had expected the index to climb to a reading of 48.3 from the 48.2 originally reported for the previous month.
Personal income in the U.S. rose in line with economist estimates in the month of December, according to a report released by the Commerce Department on Monday, although the report also said personal spending came in virtually unchanged.
The report said personal income climbed by 0.3 percent in December, matching the increase seen in November as well as economist estimates.
Meanwhile, the Commerce Department said personal spending edged down by less than 0.1 percent in December after rising by 0.5 percent in the previous month. Spending had been expected to inch up by 0.1 percent.
With a jump in spending on public construction partly offset by a drop in spending on private construction, the Commerce Department released a report on Monday showing that U.S. construction spending rose much less than expected in December.
The Commerce Department said construction spending inched up 0.1 percent to an annual rate of $1.117 trillion in December from the revised November estimate of $1.116 trillion. Economists had expected spending to climb by 0.6 percent.
The Federal Reserve is paying close attention to the impact of huge stock market losses to start the year, Fed Vice Chairman Stanley Fischer said Monday.
“At this point, it is difficult to judge the likely implications of this volatility. If these developments lead to a persistent tightening of financial conditions, they could signal a slowing in the global economy that could affect growth and inflation in the United States,” he said in New York.
Fischer was considerably more hawkish in remarks made in the aftermath of December’s rate hike, as he predicted that four rates in 2016 were “in the ballpark.”
The European Central Bank will review and possibly reconsider its monetary policy stance when it meets in March, Executive Board member Benoit Coeure said Monday.
“But for the recovery to become structural – and thus to increase growth potential and reduce structural unemployment – monetary policy does not suffice,” policymaker said at a conference in Budapest.
The dollar has weakened to around $1.09 against the Euro Monday afternoon, from Friday’s high of $1.0809.
The euro area manufacturing sector growth slowed as estimated in January with rates of expansion in output, new orders and new export business all easing at the start of the year, final survey data from Markit showed Monday.
The final manufacturing Purchasing Managers’ Index fell to 52.3 in January from 53.2 in December. The reading matched flash estimate.
The buck has dropped to a 2-week low of $1.4430 against the pound sterling Monday, from a high of around $1.4150 on Friday.
British manufacturing growth quickened unexpectedly at the start of the year to the strongest level in three months, survey data from Markit Economics showed Monday. The Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index for manufacturing rose to 52.9 in January from 52.1 in December. Economists had expected the index to fall to 51.8.
U.K. mortgage approvals rose to a 4-month high in December, the Bank of England reported Monday. The number of mortgage approvals rose unexpectedly to 70,837 in December from 70,424 in November. This was the highest since August 2015. Economists had forecast approvals to fall to 69,600 in December.
The greenback has dipped to around Y121.075 against the Japanese Yen Monday afternoon, from an early high of Y121.437.
The material has been provided by InstaForex Company – www.instaforex.com