The greenback declined against high-yielding currencies on Monday as better-than-expected U.S. data encouraged investors to purchase riskier assets. Dow Jones Index gained 112 points to end at 9599 level. U.S. ISM non-manufacturing data rose to 50.9 in September, the first time to climb above the 50 level (threshold between contraction n expansion in the industry) since Aug '08 and also beat the forecast figure of 50.0. Commodities were also benefited, gold rose over 10 dollar per ounce.
In Asian session, the single currency extended Friday's rebound from 1.4480 and reached European high of 1.4656. Although price retreated from there to 1.4592 due to profit-taking, renewed buying emerged and the U.S. data gave support to euro, sending it to as high as 1.4670 in U.S.afternoon before retreating. Earlier in the day, Europe’s retail sales came out at -0.2% in August, better than forecast of -0.5%, while service PMI came out at 50.9, also better than forecast of 50.6.
Cable gained in Asian session and European morning on continued short-covering and reached an intra-day high of 1.6025, price then retreated from there to 1.5903 in U.S. opening (despite the better-than-expected PMI from U.K. which came out at 55.3, higher than forecast of 54.5) and traded sideways in U.S. session. Over the weekend, G-7 finance officials repeated language they used in April in their statement, saying “excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability.”
Economic data to be released on Tuesday:
Australia RBA rate decision, trade balance; Switzerland CPI; U.K. industrial and manufacturing production; Canada building permits, Ivey PMI.