Dollar Pulls Back As Markets Get Back To Business

Sponsored Links

The dollar took a beating on Monday as most traders got back in the swing following the extended New Year's break. Global stocks moved higher, fueling increased risk appetite and interest in higher-yielding currencies, particularly those linked to commodity prices.

A mixed bag of economic data kept traders guessing about the health of the US economy. While the dollar rose sharply in December on expectations that an economic recovery could compel the Federal Reserve to lift interest rates, many are now saying that stabilization was a result of government spending that is unsustainable.

The dollar continued to decline versus the loonie, edging closer to parity with its petro-linked Canadian counterpart. The buck slipped to a 2-month low of C$1.0351 as the price of crude jumped back above $81 a barrel.

The dollar continued a run of choppy trading versus the euro, giving back its gains from over the New Year's break. The buck dropped to 1.4410, a full 2 cents from a 3-month high near 1.4200 set back in December.

The greenback also tailed off versus the sterling, easing to 1.6200 from a two-month high near 1.5850.

Ending a run of gains versus the yen, the dollar edged lower to 92.60 from a 4-month high of 93.20.

In economic news from the US, activity in the manufacturing sector expanded for the fifth consecutive month in December, according to a report released by the Institute for Supply Management on Monday. The index of activity in the sector rose to its highest level in over three years.

The ISM said its index of activity in the manufacturing sector jumped to 55.9 in December from 53.6 in November, with a reading above 50 indicating growth in the sector. Economists had been expecting the index to increase to a reading of 54.3.

Meanwhile, the Commerce Department said that spending on new construction fell by a little more than economists had been anticipating. The report showed that construction spending fell 0.6 percent to an annual rate of $900.1 billion in November from the revised October estimate of $905.6 billion.

(Market News Provided by RTTNews)