Euro and Franc Continue to Hit the US Dollar
The recovery of the US dollar was still fragile as it did in Thursday's session. Having briefly strengthened against its rivals after a hawkish Federal Reserve statement on inflation and the outlook for US economic growth, the greenback was pressed again yesterday.
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The US dollar fell strongly against a basket of major currencies although most of the economic data looked optimistic while a sharp rise in the euro and Swiss franc added to the decline in US currency.
CNBC data on Friday morning showed the US Dollar Index (DXY), which measures the greenback's strength against trade-weighted six major currencies, down 0.56% to 88.65.
The manufacturing purchasing managers index of the December period's ISM reported at 59.1, beating economists' forecasts for a reading of 58.8, while new orders in December fell to 65.4 compared with 67.4 a month ago.
Despite some weaknesses in ISM data, market participants remain confident that the US economy will be able to continue its growth path. Wells Fargo said the ISM data showed pending orders and supplier delivery times increased for a month, suggesting recent momentum will continue in the near future.
The same day the US Department of Labor reported that initial jobless claims fell by 1,000 in seasonally adjusted figures to 230,000 for the week ended Jan. 27, better than forecast of 238,000.
A series of recent bullish US economic data turned out to not lead to a reversal of the US dollar as rival currencies like the euro continue to gather market demand amid expectations that the European Central Bank (ECB) is getting nearer the end of its quantitative easing program.
EUR/USD closed up 0.77% at $1.2510 while EUR/GBP ended up 0.22% at £0.8766.
GBP/USD ended up 0.51% to $1.4262, while USD/JPY closed up 0.18% at 109.38 yen.
USD/CHF extended its downward trend to a negative close of 0.53% at Fr0.9261 and USD/CAD stabilized on the downside until it ended negative 0.40% at $1.2263 as oil prices boosted the loonie's rebound against the greenback.