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US dollar recovers from post-ISM drop
The US dollar is holding up well despite weak US economic data released on Tuesday. Investors shrugged off disappointing US manufacturing data and instead focused on expectations that the European Central Bank would announce further economic stimulus this week.
The Institute for Supply Management’s headline index of manufacturing activity fell to 48.6 from 50.1 in October — below expectations and the lowest reading since June 2009.
The last time the ISM index fell below the 50 mark — which nominally divides expansion from contraction — was in November 2012.
USD/JPY traded up from 122.82 to 123.07 in Asia, recovering after yesterday’s drop in reaction to the weak US ISM manufacturing data.
The single currency has retreated steadily from levels close to $1.15 in mid-October to its lowest in seven months amid indications from European Central Bank officials that further steps would be taken to bolster growth and inflation in the Eurozone. EUR/USD opened in Asia today at 1.0633 but then backed down to 1.0614 in extremely quiet trading.
Hong Kong’s Hang Seng was up -.3 per cent, Australia’s S&P/ASX 200 was down 0.3 per cent and Japan’s Nikkei 225 was down 0.2 per cent. In mainland China, the Shanghai Composite was up 0.4 per cent and the Shenzhen Composite was down 1.7 per cent.
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