Dollar Rises on Manufacturing Data

By IBTimes Staff Reporter | March 02 2010 8:07 AM

The dollar has strengthened against most of its major counterparts on Monday after data showed the U.S. manufacturing sector grew in February, although at a slower rate than expected, and worries about Greece's financial stability sent investors to the U.S currency safety. As a result, the USD finished yesterday trading session around 200 pips higher against the GBP at the1.4935 level. The greenback also saw bullishness against the EUR and closed at 1.3520.

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U.S. manufacturing output expanded in February for a seventh straight month, as factory output has provided one of the few areas of strength for the economy. The Institute for Supply Management's factory index fell to 56.5, lower than anticipated, from January's 58.4, which was the highest since August 2004. The manufacturing revival may help lead to the job growth needed to propel consumer spending and the economy.

Sentiment in the U.S economy has brightened in the past month following better-than-expected news. The USD is showing signs of resilience even though there was volatility throughout non-USD crosses. It will be crucial for traders to identify how the preceding economic indicators from the U.S., European and Japanese economies will affect their positions.

Investors may look for the unusual price volatility to continue in the EUR/USD as the pair attempts to stabilize and find new support and resistance lines. Large price jumps such as these are not common place and present terrific opportunities to take advantage of the price swings for large profitable gains.