The dollar held its ground against its peers today following the release of varied US economic data amid worry over ongoing tensions in the Middle East causing the market to avoid risky assets. The Institute of Supply Management revealed that its non-manufacturing purchasing managers’ index declined to its lowest level in 20 months to a reading of 55.3 in December from 55.9 in November. US factory orders dropped by 0.2% in November in line with expectations. Non-farm private employment increased by 257,000 in December surpassing forecasts for a rise of 192,000. The US trade deficit shrunk from $44.58 billion in October to $42.37 in November while experts forecast a decrease to $44.0 billion. The US Dollar Index traded steadily at 99.52 after having come off its 1 month high of 99.73 reached earlier in the session.
The market remained on edge following news reports North Korea performed a nuclear test detonating a hydrogen bomb. North Korea announced that it will not relinquish its nuclear capabilities unless the US ends its aggressive foreign policy towards the nation. Investors also remained watchful after the execution of a well-known Saudi Shia cleric resulted in Saudi Arabia severing its diplomatic ties with Iran.
The euro held its ground against the dollar with the pair trading at its session high of 1.0787 after having come off its session low of 1.0714 reached earlier in the day. Markit released data which revealed that its euro zone services purchasing managers’ index climbed from 53.9 in November to 54.2 in December while experts forecast the index to be unchanged. Germany’s services PMI was up from 55.4 in November to 56.0 in December while the services PMI for France dropped from 50.0 to 49.8. The euro had been pressured to 3 week lows on the back of poor inflation data urging the European Central Bank to revamp its stimulus program.
The pound weakened against the dollar with the pair down 0.42% trading at 1.4611 off its session low of 1.4600 after having come off its session high of 1.4681 reached earlier in the day. Markit reported that its UK services PMI dropped from a reading of 55.9 in November to 55.5 in December. Experts forecast the index to slide to 55.6 in December.
The yen strengthened against the dollar with the pair down 0.27% trading at 118.74 off its session low of 118.24 after having come off its session high of 119.16 reached earlier in the day. The yen rose to 3 month highs as market risk aversion continued to support safe haven demand for the yen amid discouraging economic data out of China and concerns regarding North Korea and the Middle East. China’s yuan dropped to 5 year lows as the market anticipates further weakness in the currency amid lagging growth and stock market downturn.
The Australian, New Zealand and Canadian dollars weakened against the greenback. The Aussie tanked over 1% against the dollar with the pair trading at 0.7066 off its session low of 0.7048 after having come off its session high of 0.7171. The kiwi dollar declined 0.87% against the greenback with the pair trading at 0.6646 off its session low of 0.6625 after having come off its session high of 0.6707. The loonie was down 0.7% against the greenback with the pair trading at 1.4089 off its session high of 1.4108 after coming off its session low of 1.3972. The pair was trading at 12 year highs despite data which revealed that Canada’s trade deficit shrank from CAD 2.49 billion in October to CAD 1.99 billion in November. Experts forecast the deficit to increase to CAD 2.60 billion in November.
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