FX Roundup: Dollar falls on poor ISM, manufacturing data

The dollar fell against a basket of global currencies on Tuesday, after the US ISM manufacturing index in November declined to its lowest level since July 2009.

The index fell to 48.6 from 50.1 in November, remaining marginally above analysts’ expectations for a 50.5 reading. The sub-index tracking new orders fell four points to 48.9, reaching the lowest level in over three years, while the employment gauge rose 3.7 points to 51.3.

Additional data also indicated that US manufacturing expanded at its slowest pace in 25 months as new orders slowed down.

The final reading of the Markit manufacturing purchasing managers’ index for November declined from 54.1 in October to 52.8, reaching its lowest level since October 2013, although the figure was marginally above the 52.6 flash estimate released last month.

Markit added the figure was also weaker than the post-crisis average of 54.3 and indicated a relatively subdued performance in the sector over the month.

At 1525 GMT, the dollar fell against the yen by 0.21% changing hands at JPY122.85. Concurrently, the pound rose 0.19% against the dollar exchanging at $1.5085, while the euro fell 0.61% to change hands at $1.0629, inching away from parity against the greenback.

Continuing with major crosses, the greenback fell 0.26% against the Swiss franc exchanging at CHF1.0263, still staying comfortably above parity in the dollar’s favour during late European trading.

Meanwhile, the pound sterling corrected against the euro fetching €1.4194 down 0.42%, ahead of the European Central Bank meeting later this week.

Elsewhere, the dollar also fell against selected commodity-linked currencies. The greenback shed 0.53% against the Norwegian Krone changing hands at NOK8.6522. It also registered declines of 0.10%, 0.75% and 0.76% against the Canadian dollar, Colombian peso and Brazilian real changing hands at CAD$1.3349, COP$3,122.50 and BRL3.8385 respectively.

Finally, the Australian dollar rose against its US counterpart by 1.26% changing hands at US$0.7318, while the New Zealand dollar rose 1.41% changing hands at US$0.6677.

Kit Juckes, head of forex at Societe Generale, said, “Both the AUD and NZD were the main market movers overnight, with NZD leading the way. The Reserve Bank of Australia left rates on hold, and in New Zealand house price inflation is up to 15% year-on-year, which is prompting a few questions about the odds of a rate cut at next week's Reserve Bank New Zealand meeting. The consensus looks for a cut to 2.5% from 2.75%.

“We like long AUD/NZD but it may stall until the RBNZ meeting, and we like short NZD/CAD but that too may be in for a bumpy few days.”