Tuesday, August 4, 2009

Dollar Tumbles on Optimistic Manufacturing Data

The release of better than expected figures of ISM Manufacturing PMI brought the Dollar tumbling. The indicator reached its 11 month high of 48.9. It appears to be much higher than forecasted 46.4. The improvement in U.S. construction also added to optimism. Risk appetite grew on Monday bringing decline in demand for the greenback. The U.S. currency tumbled against all major Forex currencies as traders believe that the worst of recession is over expecting sooner growth. Therefore, the Dollar declined to its 7 month bottom.

The EUR/USD pair jumped to as high as 1.4444, before ending the trades at 1.4421 level the lowest rate for 7 months. The USD fell by about 250 pips vs. the British Pound to 1.6980. One of the only currencies that the Dollar appreciated against yesterday was the Yen. Among today`s economic events, forex traders can assume volatile market. The Dollar is expected to rise against its major currency counterparts. The traders are expecting for the release of Personal Spending and Personal Income data at 12:30 GMT, and the release of U.S. Pending Home Sales at 14:00 GMT.

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