RTTNews - The dollar surged versus most majors on Tuesday as risk averse traders rushed to establish positions in the safe have currency amid speculation that stocks are due for a correction.
The bulls have been in command on Wall Street for most of the summer, but renewed concerns about economic weakness has caused exuberance to wane. The dollar benefit when traders grow cautious, as evidence by its climb to multi-year highs during the throes of the financial crisis.
Traders digested a slew of key economic data, including some relatively upbeat figures from the manufacturing sector.
Following eighteen consecutive months of contraction, the Institute for Supply Management released a report on Tuesday showing that economic activity in the manufacturing sector expanded in the month of August.
Meanwhile, pending home sales increased by much more than expected in the month of July, according to a report released by the National Association of Realtors on Tuesday, with pending sales increasing for the sixth consecutive month.
However, while housing and manufacturing appear to be stabilizing, the job situation remains grim. The most important economic report of the unfolding week will be the Labor Department's non-farm payroll employment report for August, which is due out on Friday.
Looking at today's currency charts, the dollar surged to a 2-week high of 1.4176, moving away from a 2009 low of 1.4446, set a month ago.
The dollar jumped to a 7-week high of 1.6112 versus the sterling, extending its recent gains.
Eurostat said in a report that Eurozone jobless rate stood at 9.5% in July, up from 9.4% in the previous month. This was the highest jobless rate since May 1999.
A key indicator for Eurozone manufacturing activity increased to a 14-month high in August, rising more than initially estimated, a report by Markit Economics said on Tuesday. However, the sector continued to contract, though at a slower pace.
UK manufacturing sector unexpectedly shrunk in August, a key survey by the Chartered Institute of Purchasing and Supply and Markit Economics reported.
The dollar barely budged versus the yen, holding near 93 as traders continued to assess the results of Japan's national elections last weekend. A sweeping win by the Democratic Party of Japan ended a half-century of almost unbroken rule by the Liberal Democratic Party.
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