Dollar Dips Against Most Major Currencies After Disappointing U.S. Economic News
BERLIN (AP) — The dollar fell against most major currencies Friday, after disappointing economic news from the United States. The euro hit a 20-month high of $1.3348 following the Institute for Supply Management’s report that the U.S. manufacturing sector contracted in November for the first time in more than three years. The ISM said its manufacturing index registered 49.5 in November, behind October’s reading of 51.2 and lower than the analyst expectation of 52. The last time the sector contracted was in April 2003.
It was moving closer to its all-time high of $1.3667, set in December 2004.
The British pound rose to its highest level against the dollar since September 1992, prompting analysts to predict that it would hit $2 by the end of the year. It hit $1.9847, up from $1.9661 on Thursday. The dollar fell to purchase 115.05 Japanese yen, from 115.75 the day before.
The euro has risen from below the $1.30 mark over the past week amid expectations that the European Central Bank will continue to raise interest rates, while the Federal Reserve holds, or eventually cuts, rates.
Analysts said it did not appear that the trend would change anytime soon.
The euro’s rise was fueled on Thursday by mixed economic news from Washington and data from Germany, Europe’s largest economy, that showed unemployment hitting a four-year low. The pound is benefiting from rising home prices and merger and acquisition activity in Britain.
U.S. economic data are being watched closely for pointers on the Federal Reserve’s interest rate course. Higher rates, a weapon against inflation, tend to strengthen a currency by making investments in it more attractive.
Data released Friday showed that Japan’s core consumer price index rose 0.1 percent in October from a year earlier — below the 0.2 percent gain forecast by economists.