NEW YORK: The dollar jumped to its highest this year against the yen on Tuesday, lifted by strong US economic data, while the euro slipped to a one-year low on speculation the European Central Bank will move toward looser monetary policy when it meets later this week.
US manufacturing activity rose to its highest level in nearly 3-1/2 years in August and construction spending rebounded strongly in July, in the latest signs of the US economy's vigor.
The data lifted the dollar almost 0.8 percent against the Japanese yen, pushing it above the 105 yen mark for the first time since the first week of this year.
US Treasuries slumped on the data, with the 10-year note falling 18/32 in price to yield 2.4104.
The euro sagged on bets the ECB will do more to help a wobbly euro zone economy.
"Even if Draghi doesn't announce rate cuts or QE (asset purchases), I think he will open doors to further significant action further down the road and that should be enough to support the market at least for now," said Nick Stamenkovic, a strategist at RIA Capital Markets in Edinburgh.
Global equity markets and European shares edged lower before the ECB's meeting. Few investors expect major steps but most see looser policy in the future as the euro zone fails to grow thanks to austerity measures and conflict in Ukraine.
MSCI's all-country world index of 45 countries fell 0.08 percent while the pan-European FTSEurofirst 300 index, which has risen nearly 7 percent from its mid-August low, edged down by 0.04 percent to 1,376.28 points.
Wall Street was little changed.
The Dow Jones industrial average fell 7.67 points, or 0.04 percent, to 17,090.78. The S&P 500 rose 0.49 points, or 0.02 percent, to 2,003.86 and the Nasdaq Composite added 13.55 points, or 0.3 percent, to 4,593.82.
"The market is probably pricing in stronger numbers on the economic side but it's still very much positive," said James Liu, global market strategist at JPMorgan Funds, in Chicago.
"We are expecting to see stronger economic numbers, the market is certainly expecting that, and as long we get them we can do quite well above 2,000 on the S&P 500," Liu said.
Brent crude fell below $102 a barrel, pressured by worries about slowing oil demand growth in China and Europe, a strong US dollar and ample supplies.
Brent crude for October delivery was down 98 cents at $101.81 a barrel. US crude was down $1.28 from Friday's close at $94.68 a barrel. There was no trading in the United States on Monday because of the Labor Day holiday.
Comments
Comments are closed for this article.