Wednesday, September 7, 2016

Dollar index eases off 1-1/2 week lows but gains capped Sep 07, 2016

Dollar index eases off 1-1/2 week lows but gains capped Sep 07, 2016,

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Dollar index eases off 1-1/2 week lows but gains capped

 The dollar eased off one-and-a-half week lows against the other major currencies on Wednesday, but gains were expected to remain limited as the previous session's downbeat U.S. data lowered expectations for a rate hike by the Federal Reserve this year even further.

 EUR/USD slipped 0.13% to 1.1240. Sentiment on the greenback remained vulnerable after the Institute of Supply Management said on Tuesday that its non-manufacturing purchasing manager's index fell to 51.4 last month from 55.5 in July.

Analysts had expected the index to drop to 55.0. The data came after downbeat U.S. employment data published last Friday crushed expectations for an upcoming rate hike by the Fed.

 Meanwhile, the single currency weakened as investors eyed the European Central Bank's upcoming meeting on Thursday, amid speculation over potential easing measures to boost growth. Earlier Wednesday, data showed that German industrial production declined by 1.5% in July, compared to expectations for an uptick 0.2% rise.

 Industrial production increased by 1.1% in June, whose figure was revised from a previously estimated 0.8% gain. GBP/USD declined 0.45% to 1.3379, off the previous session's one-and-a-half month high of 1.3446.

 The U.K. Office for National Statistics said on Wednesday that manufacturing production decreased by 0.9% in July, worse than expectations for a decline of 0.4%. On an annualized basis, manufacturing production rose 0.8% in July, worse than forecasts for a 1.7% increase.

 However, the report also showed that industrial production inched up by 0.1% in July, better than forecasts for a 0.2% decrease.

Year-on-year, industrial production increased 2.1% in July, above expectations for a 1.9% rise. USD/JPY slid 0.35% to 101.66, while USD/CHF dipped 0.03% to trade at 0.9695. The Australian dollar was weaker, with AUD/USD down 0.30% at 0.7665, while NZD/USD gained 0.63% to 0.7464.

The Australian Bureau of Statistics said gross domestic product rose 0.5% in the second quarter, disappointing expectations for an uptick of 0.6%. Year-on-year, Australia's GDP increased by 3.3% in the three months to June, compared to expectations for a 3.4% rise. Elsewhere, USD/CAD held steady at 1.2852, close to Tuesday's two-week trough of 1.2822.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, edged up 0.11% to 94.90, not far from the one-and-a-half week lows of 94.68 hit overnight.