The dollar added slight gains and remained at 9 year highs against its peers today overlooking discouraging US service sector and factory orders data as dollar demand was heightened by the market avoiding risk. The Institute of Supply Management reported that its non-manufacturing PMI dropped to its lowest level in 6 months from 59.3 in November to 56.2 in December while experts forecast a reading of 58. Other data revealed that US factory orders declined 0.7% in November while a drop of 0.5% was forecast.
The euro weakened against the dollar hovering near its weakest level since February 2006 set on Monday. The euro traded at lows of the day following the release of data which revealed that euro zone private sector activity wound down at a slower rate than originally forecast for December. Markit’s composite PMI which factors manufacturing and service sector activity in the euro zone registered at 51.4 in December. The European Central Bank was compelled to consider implementation of stimulus measures prior to its next meeting set for January 22 as a result of the poor data. The euro was also weighed down by doubt surrounding Greece’s status within the euro zone.
The pound weakened against the dollar hovering close to 17 month lows following the release of data which revealed a decline in activity within the UK’s dominant service sector for December. The data supported predictions that the Bank of England will keep rates unchanged for the majority of 2015. The pound was weaker against the euro.
The yen strengthened against the dollar as weakening global equity markets generated safe haven demand for the yen, as declining oil prices and worry over the state of the euro zone economy triggered a stock selloff.
As global oil prices continue to fall, commodity associated currencies such as the Australian, New Zealand and Canadian dollars remain near multi year lows against the dollar despite having regained some ground. Statistics Canada released data which showed that raw materials prices decreased 5.8% in November further than forecasts of 5.0% which put pressure on the Canadian dollar.
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