The dollar strengthened slightly regaining lost ground against its peers today overlooking figures which revealed that US manufacturing activity declined at its fastest rate in over 6 years.  The Institute for Supply Management’s purchasing managers index dropped from a reading of 48.6 in November to 48.2 in December while experts forecast an increase to 49.0.  The US Dollar Index was up 0.17% trading at 98.95 off its session low of 98.12 reached earlier in the day. 

The euro weakened against the dollar with the pair declining 0.31% trading at 1.0822 off its session low of 1.0780 after having come off its session high of 1.0945 reached earlier in the day.  The pair came off its 1 month low after global equity markets posted sharp declines led by a selloff in China with gold and bond prices on the rise.  Worries over global growth outlook were rekindled on the first trading day of 2016. 

The pound weakened against the dollar with the pair down 0.19% trading at 1.4710 off its session low of 1.4662 after having come off its session high of 1.4814 reached earlier in the day.  The pair hovered near 8.5 month lows as investors overlooked data which revealed that Markit’s UK manufacturing PMI declined to its lowest level in 3 months to a reading of 51.9 in December from 52.5 in November.  Analysts expected the index to rise to 52.7 in December. 

The yen strengthened against the dollar with the pair down 0.85% trading at 119.20 off its session low of 118.70 after having come off its session high of 120.46 reached earlier in the day.  The yen was supported by an increase in safe haven demand following the release of data which revealed that China’s Caixin manufacturing PMI dropped from a reading of 48.6 in November to 48.2 in December compounding forecasts for an increase to 48.9.  Readings below the 50 point mark indicate contraction and December’s level was its lowest in 3 months.  The market was also on edge as a result of increasing conflict in the Middle East following news that Saudi Arabia severed its diplomatic link to Iran.  The Saudi embassy in Tehran was attacked in retaliation to the execution of a well-known Shiite cleric.

The Australian, New Zealand and Canadian dollars weakened against the greenback as worry surrounding growth of China’s economy and conflict in the Middle East increased risk aversion.  The Aussie tanked 1.52% against the dollar with the pair trading at 0.7177 off its session low of 0.7155 after having come off its session high of 0.7301 reached earlier in the day.  The kiwi dollar also plummeted 1.22% against the greenback with the pair trading at 0.6747 off its session low of 0.6718 after having come off its session high of 0.6835 reached earlier in the day.  The loonie lost over 0.5% against the greenback with the pair trading at 1.3950 off its session high of 1.3982 near its 11 year peak after having come off its session low of 1.3812 reached earlier in the day.   

Disclaimer:  This information has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.