The dollar is gaining ground against all of its major competitors on Friday. The strength in the U.S. currency can be attributed to weak economic data out of Europe and some better than expected results here in the United States. The risk appetite of investors has also been reduced ahead of the looming spending cuts, which are due to kick in on March 1st.
Economic activity in the U.S. manufacturing sector expanded for the third consecutive month in February, the Institute for Supply Management revealed in a report on Friday, with the index of activity in the sector unexpectedly rising to its highest level in over a year and a half.
The ISM said its purchasing managers' index rose to 54.2 in February from 53.1 in January, with a reading above 50 indicating growth in the manufacturing sector. Economists had been expecting the index to edge down to a reading of 52.8.
Consumer sentiment in the U.S. improved by even more than initially estimated in the month of February, according to a report released by Thomson Reuters and the University of Michigan on Friday. The report said the final reading on the consumer sentiment index for February came in at 77.6 compared to the mid-month reading of 76.3. Economists had expected the index to be downwardly revised to 76.0.
Personal income in the U.S. fell by more than anticipated in the month of January, according to a report released by the Commerce Department on Friday, with the sharp drop coming after a significant increase in December. The report said personal income tumbled by 3.6 percent in January after surging up by 2.6 percent in December. Economists had been expecting income to pull back by about 2.1 percent.
Despite the pullback in personal income, the report also showed that personal spending edged up by 0.2 percent in January after inching up by 0.1 percent in December. The increase in spending matched economists' expectations.
Construction spending in the U.S. unexpectedly showed a significant decrease in the month of January, according to a report released by the Commerce Department on Friday. The report said construction spending fell 2.1 percent to a seasonally adjusted annual rate of $883.3 billion in January from the revised December estimate of $902.6 billion.
The sharp drop in construction spending came as a surprise to economists, who had expected spending to increase by 0.6 percent.
The dollar slipped to an early low of $1.3010 against the Euro Friday morning, but has since climbed to nearly a 3-month high of $1.2965.
Eurozone's manufacturing sector contracted at a slightly weaker pace than estimated earlier in February, final data released by Markit Economics showed Friday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector came in at 47.9 in February, which was unchanged from January's 11-month high. The latest reading was slightly higher than 47.8 seen in the preliminary estimates.
Eurozone inflation moved within the central bank's target for the first time since late 2010, while unemployment rose to an all time high, raising pressure on the European Central Bank to ease interest rates.
Inflation eased more-than-expected to 1.8 percent in February, the lowest since August 2010, from 2 percent in January, a flash estimate from Eurostat showed Friday. Final data is due on March 15. The rate was expected to slow to 1.9 percent. Inflation has moved into the ECB's 'below, but close to 2 percent' target.
Another report from Eurostat showed that the unemployment rate in the euro area rose to a record to 11.9 percent in January from an upwardly revised 11.8 percent in December. Economists had forecast the rate to rise to 11.8 percent from December's originally estimated 11.7 percent.
German retail sales in January recovered at the fastest pace in 6 years, suggesting that consumer spending bolstered domestic demand and economic rebound at the start of the year.
Real retail sales rose 3.1 percent in January from the previous month when they were down 2.1 percent, data from the Federal Statistical Office showed Friday. The 3.1 percent growth rate was the fastest pace since December 2006 and far exceeded the 0.9 percent increase forecast by economists.
Activity in the German manufacturing sector increased more than initially estimated in February, recovering from the modest decline seen in the previous month, survey data released by Markit Economics and BME showed Friday. The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector increased to 50.3 in February from 49.8 in January. The flash estimates were for an increase to 50.1.
French manufacturing downturn eased more than previously estimated in February, detailed results of a survey by Markit Economics revealed Friday. The purchasing managers' index rose to 43.9 in February from 42.9 in January. The latest score was slightly higher than the flash reading of 43.6.
The greenback dipped to an early low of $1.5185 against the pound sterling on Friday, but has since broken out to over a 2-year high of $1.4984.
The British manufacturing sector unexpectedly slipped back into contraction in February, for the first time in three months, after recoding growth in the previous months, latest data showed Friday.
The seasonally adjusted purchasing managers' index (PMI) for the manufacturing sector dropped to 47.9 in February from 50.5 in January, a survey by Markit Economics and the Chartered Institute of Purchasing and Logistics (CIPS) showed. Economists had forecast a reading of 51.
The buck has extended its gains against the Japanese Yen to a third consecutive session on Friday, rising to a 4-session high of Y93.496.
Core inflation in Japan dipped 0.2 percent on year in January, the Ministry of Communications and Internal Affairs said on Friday, which was unchanged from the previous month and in line with forecasts. Overall CPI was down an annual 0.3 percent versus forecasts for -0.2 percent after showing -0.1 percent in December.
Average household spending in Japan was up 2.4 percent on year in January, the Ministry of Communications and Internal Affairs said on Friday, standing at 288,934 yen. That topped forecasts for an increase of 0.4 percent following the 0.7 percent annual contraction in December.
Japan had a seasonally adjusted unemployment rate of 4.2 percent in January, the Ministry of Communications and Internal Affairs said on Friday. That was in line with expectations and down from the revised 4.3 percent in December.
by RTT Staff Writer
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