Dollar Stayed Lower
On Friday, the dollar stayed lower compared to the other major currencies, after the announcement of positive U.S. manufacturing activity data as the markets re-assessed the consequences of the Brexit vote.
The Institute for Supply Management stated its index of manufacturing activity increased by 53.2 the previous month from May’s 51.3. Analysts anticipated the factory index to increase to 51.4.
GBP/USD fell 0.26 percent to 1.3276, off the 31-year decline of 1.3122 set on Monday, a level not met since 1985. The two-day sell-off in sterling last Friday and Monday was the biggest in latest history.
The pound was still improving from the severe losses posted after Britain’s surprise choice to exit from the European Union last week .
On Thursday, Bank of England Governor, Mark Carney indicated that more stimulus may be required over the summer, generating anticipations for an approaching rate reduction.
In an interview, Federal Reserve Vice Chairman Stanley Fischer stated on Friday that it was still too early to assess the influence of the Brexit and that the central bank will have a good idea of the economic situations after its July meeting.
Earlier in the day, research group Markit stated that its U.K. manufacturing purchasing manager's index increased by 52.1 the previous month, compared to the reading of 50.1 in May. That has been its peak level since January 2016. Analysts had anticipated the index to decline back into contraction at 49.9 in May.
Temporarily, safe-haven currencies stayed supported, following downbeat Chinese manufacturing statistic, which generated fresh concerns over a stoppage in the world’s 2nd biggest economy.
USD/JPY dropped 0.50 percent at 102.70, while USD/CHF lost 0.15 percent to 0.9746.
Statistics on Friday presented that China’s Caixin manufacturing PMI dropped to 48.6 in June from 49.2 the prior month, against the anticipated downtick of 49.1.
Together, China’s official manufacturing PMI came in at 50.0 last month from 50.1 in May, in line with the expectations.
EUR/USD added 0.14 percent to 1.1118, while EUR/GBP increased 0.54% to 0.8377.
On Friday, Eurostat stated that the euro zone’s unemployment percentage declined to 10.1 percent, from April’s reading of 10.2 percent. The reading was in line with the predictions and came as the lowest since July 2011.
The Australian and New Zealand dollars were higher, with AUD/USD increasing 0.43 percent to 0.7482 and with NZD/USD progressing 0.55 percent to 0.7172. Somewhere else, USD/CAD fell 0.26 percent to trade at a one-week decline of 1.2891.
The U.S. dollar index, which gauges the greenback’s strong point compared to a trade-weighted basket of six major currencies, declined 0.13 percent at 95.83.
On Monday, the pound held stable compared to its U.S. counterpart, still soaring close to 31-year decline after statistics presented that U.K. construction activity went in contraction territory the previous month, adding worries over a stoppage in Britain after the Brexit poll.
Trading capacities were anticipated to stay thin with U.S. markets closed for Independence Day.
GBP/USD touched the session low of 1.3254 during the European morning trade, the pair then consolidated at 1.3262.
Cable was expected to find support at 1.3195 and resistance at 1.3350, Friday’s peak.
Research company Markit and the Chartered Institute of Purchasing & Supply stated their U.K. construction purchasing managers’ index dropped by 46.0 in June, higher than the 51.2 reading in May. Economists had anticipated the index to decline to 50.5 in June.
It was the first time that the reading declined since April 2013 and the most sluggish level in seven years.
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