Dollar Strengthened Ahead Of Labor Market Figures | IFCM India
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Dollar Strengthened Ahead Of Labor Market Figures - 2.9.2011

US Dollar The greenback strengthened yesterday against all its major counterparts, except the Australian and Canadian dollars. The data from the USA showed that manufacturing activity unexpectedly expanded in August, allaying concern the world’s largest economy is headed for another recession. The Institute for Supply Management’s factory index fell to 50.6 last month from 50.9 in July. However economic activity in the manufacturing sector expanded in August for the 25th consecutive month, as figures above 50 signal expansion. Despite economists projected a drop to 48.5, of the 18 manufacturing industries, 10 are reporting growth in August, the report said. Moreover, statistics from the labor market also turned out to be better in comparison with estimations. A report from the Labor Department showed initial jobless claims decreased by 12000 to 409000 last week. The key labor market figures however are scheduled to be released today. Preliminary forecasts say that hiring in the US probably slowed in August as American companies became less optimistic about the strength of the recovery. Private payrolls, which exclude government jobs, rose by 95000 (very close to the private ADP report issued two days before) following a 154000 increase in the prior month, economists said, while non-farm payrolls may show only a 68000 gain after a 117000 increase in July. The unemployment rate held at 9.1% in August, separate Labor Department data may show, signaling that the central bank is still far from its objective to ensure full employment. The dollar index, which measures its value against a basket of six currencies of the major US trading partners, rose yesterday to a four-week high 74.71. Euro The euro was set for its biggest weekly drop against the dollar in almost two months (since the beginning of July) as European economic reports confirmed that the region’s recovery is getting weaker. The data showed euro-zone manufacturing, which represents about a quarter of the region’s GDP, contracted for the first time in nearly two years, as sharp economic downturns gripping Greece and Ireland now threaten larger economies such as Italy and France. A manufacturing activity indicator based on a survey of purchasing managers in the region fell to 49 from 50.4 in July, a research firm Markit reported yesterday. Economists meanwhile projected a drop to 49.7. Manufacturing activity index in Germany, the largest European economy, held above the level of 50, at 50.9, still showing a modest growth. In the euro area today we are expecting the reading of the region’s producer price index in July, which measures fluctuations in selling prices of goods and services of producers. Economists predict the index advanced in July by 0.5%, accelerating to a 6.1% annual pace. The single currency fell yesterday to a three-week low 1.4226 from 1.4548 on Monday.
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