US Dollar Exchange Rate: ‘Greenback’ Boosted by Manufacturing Data and Risk Aversion
With the actions of Russia’s Prime Minister pushing investors towards safe-haven assets, the US Dollar was able to broadly advance.
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The ‘Greenback’ strengthened against the majority of its currency counterparts after Russia occupied Crimea and intimated that it was willing to use force to protect its interests in the Ukraine.
As foreign exchange strategist Charles St-Arnaud observed; ‘It’s all about Ukraine. The underperformers are the higher-yielders. Investors are looking at the Dollar and Yen as their main safe havens so far, and the Swiss Franc is also performing relatively well.’
US Dollar boosted by Markit US PMI
The US Dollar was additionally boosted by better-than-forecast manufacturing data for the world’s largest economy.
Firstly, the final Markit US PMI came in at 57.1 in February rather than the 56.7 originally estimated.
US ISM manufacturing came in at 53.2 in February, up from 51.3 the previous month and more than the 52.0 forecast.
Both measures were above the 50 mark separating growth from contraction.
Today’s reports indicate that the US manufacturing sector is recovering from the bad bout of weather which swarmed much of the US at the beginning of the year.
Key events for the week ahead
ADP Employment Change (March 6)
Initial Jobless Claims (March 7)
Change in Non-Farm Payrolls (March 8)
Unemployment Rate (March 8)
Orders rose as business confidence improved, and one New York-based economist noted; ‘We see solid capex spending this year as businesses begin to put money to work. What you’ve seen over the past couple quarters has been solid pickup in private-sector spending. Final private demand has been growing at a sold pace and that will feed on itself over time.’
Separate reports showed an increase in consumer and construction spending in the US.
Developments in Eastern Europe will be responsible for driving market movement over the next few days, although further US Dollar volatility will most certainly be occasioned by Friday’s US non-farm payrolls report.
As it stands the US Dollar is trading against the Pound in the region of 0.5985 and against the Euro in the region of 0.7266.