Daily Afternoon Report 23.06.2015

The dollar extended gains against a basket of other major currencies on Tuesday, even after data showed that U.S. durable goods orders fell more than expected last month, as ongoing uncertainty over the outcome of Greek debt talks continued to weigh on sentiment.

The U.S. Commerce Department reported on Tuesday that total durable goods orders, which include transportation items, declined by 1.8% last month, worse than expectations for a drop of 0.6%.

Orders for durable goods in April were revised to a drop of 1.5% from a previously reported decline of 1.0%.

Core durable goods orders, excluding volatile transportation items, inched up by 0.5% in May, missing forecasts for an increase of 0.6%. Core durable goods orders dipped 0.3% in April, whose figure was revised from a previously reported drop of 0.2%.

The dollar strengthened broadly after eurozone finance ministers failed to reach an agreement over Greece’s bailout at an emergency meeting on Monday, but indicated that a final deal could be made later this week.

Eurogroup head Jeroen Dijsselbloem said new reform proposals from the Greek government were “broad and comprehensive,” and a good basis to restart stalled negotiations.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.11% at 95.56, the highest level since June 15.

EUR/USD tumbled 1.48% to 1.1172 as the single currency shrugged off data on Tuesday showing that private sector activity in the euro area expanded at the fastest pace in four years this month, cementing the view that the economic recovery is gaining traction.

The preliminary reading of the Markit composite purchasing managers’ index, which looks at both the manufacturing and service sectors, rose to 54.1 from a final reading of 53.6 in May. It was the highest level since May 2011 and above forecasts for a reading of 53.5.

The bloc’s manufacturing PMI rose to 52.5 this month from 52.2 in May, while the services PMI improved to 54.4 this month from 53.8.

France’s manufacturing sector expanded for the first time since April 2014 this month, as a broad-based pick-up in private business activity gained momentum. German private sector activity also expanded at a faster-than-expected pace.

The pound was also lower, with GBP/USD down 0.38% to 1.5763.

Elsewhere, the dollar pushed higher against the yen and the Swiss franc, with USD/JPY up 0.43% to 123.91 and with USD/CHF rallying 1.48% to 0.9350.

The Australian and New Zealand dollars were weaker, with AUD/USD down 0.28% to 0.7705 and with NZD/USD sliding 0.50% to 0.6830.

Meanwhile, USD/CAD rose 0.23% to trade at 1.2336.

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