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Dollar drops after dismal ISM manufacturing data

February 3, 2014

The U.S. dollar dropped against a basket of major currencies after a report showing more than forecast ease in the manufacturing sector's expansion last month. The ISM manufacturing signaled a cool down in growth to 51.3 in January from 57.0 in December, coming below analysts' forecast of 56.0. The dismal report pushed the dollar down on fears the deterioration in data would prompt policymakers to decelerate the pace of stimulus cut. Still, the focus is on fundamentals from the world's biggest economy after the Fed decided to slash $20 billion starting from January from its monthly bond purchases to $65 billion . Eyes will focus on the awaited non-farm payrolls due on Friday as it will provide evidence about the health of the labor market. The green currency pared some of the gains generated last week on expectations the capital outfight in emerging markets would transfer to the U.S. after the Fed stimu7lus taper and on signs of economic progress. The dollar index, which tracks the dollar's movements versus a basket of major currencies, slipped to a low of 81.11 after hitting a peak of 81.41. Against the yen, the dollar plunged to take the pair down to a low of 101.31 after opening today at 101.97. The EURUSD widened its gains after the ISM report as news released earlier today pushed the euro up on signs of gradual economic recovery in the 18-nation region. PMI manufacturing widened further last month to 54.0 from a prior of 53.9, above the initial reading of 53.9. The pound versus the greenback, however, fell after the slowdown in growth pace of the manufacturing sector to 56.7 in January from a revised of 57.2. The GBPUSD is meanwhile trading around 1.6353 after touching a low of 1.6322. Later in the week, investors will focus on monetary decisions by both ECB and BOE.


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Source: ICN.com Financial Markets


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