Friday, 2 September 2011

US Manufacturing Expands, Dollar Profits

The U.S. dollar advanced today as the unexpected growth in the U.S. manufacturing spurred speculation the Federal Reserve will not need to stimulate the economy by debasing the U.S. currency.

The Institute for Purchasing Managers Index Supply Management "was at 56.6 in August, with little change in the July figure of 56.9. The index is expected to fall to 48.7. A reading below 50, 0 indicates deterioration and above this value indicates expansion. Positive data suggest that perhaps the U.S. economy is in a state not bad enough to justify a new round of quantitative easing.

Unemployment claims fell from 421,000 to 409,000 last week, reducing concerns about the use to some degree. Another important reason for the concerns of the Fed, the housing market, made worse because the construction cost has not increased by 0.2 percent, as promised by the forecasts, but fell by 1.3 percent.

EUR/USD opened at 1.4374 and dropped to 1.4226 before trading near 1.4259 as of 22:57 GMT today. GBP/USD fell from 1.6249 to 1.6183, while reached the intraday low of 1.6130 earlier. USD/JPY advanced from 76.64 to 76.86 and earlier touched the high of 77.24.

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