Dollar Stays Firm Against Peers On Strong Economic Data

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The U.S. dollar gained in strength against most of its peers on Wednesday, extending its uptick for a second straight day thanks to upbeat data on manufacturing activity and factory orders.

Data from the Commerce Department today showed U.S. factory orders soared by 6.4% in July, matching the upwardly revised spike seen in June.

Economists had expected factory orders to surge up by 6% compared to the 6.2% jump originally reported for the previous month.

Factory orders continued to spike as orders for durable goods skyrocketed by 11.4% in July after soaring by 7.7% in June.

Payroll processor ADP said private sector employment increased by 428,000 jobs in August after rising by an upwardly revised 212,000 jobs in July.

Economists had expected employment to jump by 950,000 jobs compared to the addition of 167,000 jobs originally reported for the previous month.

According to the Federal Reserve’s Beige Book, economic activity in the U.S. has increased over the past several weeks, although the gains were described as generally modest.

The Fed said manufacturing rose in most districts amid increased activity at ports and among transportation and distribution firms.

Consumer spending also continued to pick up, the report said, with the increase reflecting strong vehicle sales and some improvements in tourism and retail sectors.

However, the Fed noted many districts reported a slowing pace of growth in these areas, and total spending was still far below pre-pandemic levels.

On the inflation front, the Fed said price pressures increased since the last Beige Book in July but remained modest.

Looking ahead, the Beige Book said the overall outlook among contacts was modestly optimistic, but a few districts noted some pessimism.

The dollar index, which rebounded on Tuesday after tumbling to more than 2-year low of 91.75, rose to 92.87 this afternoon before paring some gains. At 92.63, the dollar is still firmly in positive territory, gaining about 0.32%.

Against the Euro, the dollar firmed up to $1.1823 before paring some gains. Still, at $1.1853, it is up by about 0.5% over Tuesday’s close.

Eurozone producer prices continued to decline in July but the pace of annual fall slowed further, data from Eurostat showed. Producer prices fell 3.3% year-on-year in July, following a 3.7% decrease in June. Economists had forecast an annual fall of 3.4%.

The Pound Sterling weakened to $1.3283 before recovering some lost ground, surging to $1.3349, still trailing previous close by about 0.25%. U.K. house prices advanced by more-than-expected 2% on month in August, faster than the 1.8% rise seen in the previous month, data from Nationwide Building Society showed.

The yen was weaker by 0.23% at 106.20 a dollar. Earlier, it was down at 106.31 a dollar.

The Aussie was weak after data from the Australian Bureau of Statistics said the country’s gross domestic product was down a seasonally adjusted 7% on quarter in the second quarter of 2020. That missed expectations for a fall of 5.9% following the 0.3% decline in the three months prior, sending the country into recession.

The Swiss franc slipped to 0.9137 a dollar earlier in the day. After a choppy ride, it is currently at 0.9108 a dollar, compared with 0.9094 yesterday evening.

The Loonie firmed up to 1.3041 a dollar, gaining nearly 0.2%. According to data released this morning, labor productivity in Canada increased by 9.8% in the month of August, after rising by an upwardly revised 4.5% a month earlier.

The material has been provided by InstaForex Company – www.instaforex.com

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