Daily Afternoon Report 02/09/2015
The dollar pushed higher against the other major currencies today, despite the release of disappointing economic reports from the U.S., as concerns over China’s economic outlook began to ease.
Payroll processing firm ADP said non-farm private employment rose by 190,000 last month, below expectations for an increase of 201,000. The economy created 177,000 jobs in July, whose figure was downwardly revised from a previously reported increase of 185,000. Data also showed that U.S. factory orders increased by 0.4% in July, missing forecasts for a gain of 0.9%.
Investors are looking ahead to Friday’s U.S. jobs report for August, for more indications on the strength of the job market and the likelihood of a near-term interest rate hike by the Federal Reserve.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.52% at 95.88.
The dollar gained ground higher after the Nikkei rose in early trade, dampening demand for the Japanese currency. But the Nikkei ended slightly lower and Chinese shares were also lower after a volatile session after Tuesday’s run of disappointing manufacturing data added to fears over the global economic outlook.
The worsening outlook for equities has underpinned demand for the low-yielding euro and yen in recent sessions.
Investors often use low-yielding currencies to fund positions in higher-yielding currencies and equities, known as carry trading.
Data earlier showed that the Markit construction purchasing managers’ index ticked up to 57.3 in August from 57.1 in July. Economists had expected the index to improve to 57.5.
Elsewhere, the Australian Bureau of Statistics reported today that the country’s gross domestic product rose 0.2% in the three months to June, compared to expectations for a 0.4% growth rate. On a yearly basis, Australia’s GDP increased by 2.0% in the second quarter, disappointing expectations for a 2.2% gain.