The dollar strengthened to new 4 year highs against its peers today following the release of solid US manufacturing data which intensified positive outlook regarding the health of US economic recovery. The manufacturing purchasing managers’ index climbed to 59.0 in October from 56.6 in September while pundits had forecast a drop to 56.2.


The euro weakened against the dollar with the pair trading at nearly a 2 year low. The euro was weighed down by economic data released by research group Markit which reported German manufacturing PMI dropping to 51.4 in October from 51.8 in September while analysts forecast the index to be flat. The group’s manufacturing PMI for the entire euro zone dropped from 50.7 in September to 50.6 in October also while pundits forecast the index to be flat.


The pound held its ground against the dollar following data released by Markit reporting UK’s manufacturing PMI to have increased to 53.2 in October from 51.6 in September while pundits had forecast a decline to 51.2. Solid data released out of the US on Friday regarding consumer sentiment further bolstered dollar demand.  The pound was stronger against the euro.


The yen tanked weakening to new 7 year lows against the dollar with the pair breaking its 114 handle after the Bank of Japan surprised the market by announcing it will implement increased stimulus measures on Friday in order to reduce risk of deflation. The announcement continued to put selling pressure on the yen during Japan’s bank holiday today with the central bank continuing to diverge from the Fed’s outlook.


The Australian, New Zealand and Canadian dollars were widely weaker that the US dollar. The Australian dollar weakened following the release of figures which revealed that Australian building approvals decreased by 11% in September while only a 0.9% drop was forecast.


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.