Positive US data leads to dollar index continuing gains

The United States dollar continued to thrive against other important currencies on Feb. 1 post the release of positive American economic reports. Investors continue to await the policy decision to be taken by the Federal Reserve in the near future. The EUR/USD went down to 1.0743, a decline of 0.49 percent. It is a change from the seven week peak rise of 1.0814.

Surpassing forecasts

This data came in just after ADP, the American payroll processing firm, informed that employment in the non-farm private sector went up by 246,000 in January. The figures easily surpassed all forecasts. The predictions were of an increase of about 165,000 jobs. To compare, a total of 153,000 jobs were created in December.

According to Institute for Supply Management or ISM, the manufacturing activity index went up to 56.0 in January. This was a rise from the previous reading of 54.5 taken during December. This number is highest from the time of November 2014. Previously, analysts had forecast 55.0, a much smaller increase.

The US dollar had slid on January 31. This happened after the top trade advisor to Donald Trump accused Germany of exploiting the euro currency. The trade advisor alleged that Germany is keeping the Euro “grossly undervalued” so that the United States, along with its trading partner can be exploited to the maximum.

America First

President Donald J. Trump, in his separate remarks, criticized China and Japan, alleging that the two countries devalued their respective currencies to put the US at a trading disadvantage. Such remarks clearly indicate that the rate of dollar exchange may play a major role in the Trump administration. Trump has repeatedly indicated that it has a certain agenda. The name given to such an action is “America First”.

The USD’JPY went to 113.69, a jump of 0.80 percent, post scraping 112.04, a record trough of two months on January 31. In contrast there was a rise of 0.38 percent of USD/CHF to 0.7258.

The Euro remained unchanged when a report showed that manufacturing growth in Germany revved up to its quickest pace within a span of three years during January. In other territories, the GBP/USD went up to 1.2634, a gain of 0.41. Markit, the market research group, announced on February 1 that the its index of UK manufacturing purchasing managers slid to 55.9 in January from a 56.1 reading taken in December. This decline is anticipated.

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