The US dollar rose against the euro and other major currencies on Thursday, even after giving up some of the gains it made earlier today. A smaller drop than expected in manufacturing activity in Philadelphia and a low number of jobless claims supported the greenback. However, rippling effects from the Federal Reserveâs meeting minutes and political developments in the United States limited the greenbackâs gains today.
An index that tracks manufacturing conditions in the Philadelphia region remained positive in August, according to a survey conducted by the Federal Reserve Bank of Philadelphia. The index had a reading of 18.9 for the current month, which beat analyst forecasts of an 18.5 reading. However, manufacturing conditions were stronger in July at 19.5. Readings above zero reflect growth in the manufacturing sector.
Todayâs fresh number was the thirteenth positive reading in a raw, as stronger demand for manufactured goods and higher number of shipments contributed to the overall growth. A subindex that tracks short term expectations showed that 49% of the firms that were surveyed expected higher manufacturing activity in the next 6 months, while only 7% expected a decrease. The employment subindex was stable at 10.1 this month from 10.9 last month as employers continued to report increases in employment.
In a separate release, The US Department of Labor published its weekly update for initial jobless claims, which revealed that 12,000 fewer Americans applied for unemployment benefits in the week ended August 12. Meanwhile, the moving average for the past 4 weeks decreased 500 to 240,500, which continued to show that the labor market is close to full employment. The US currency touched its best level in more than 3 weeks in the wake of the report.
However, minutes of the latest Federal Open Market Committeeâs meeting, which was published yesterday, continued to weigh on the US dollar today. Policymakers within the committee remained divided over whether interest rates should be raised one more time in 2017, as the US inflation rate persisted at levels lower than the Federal Reserveâs target. The CME group FedWatch tool, which tracks prices of federal funds futures to measure investorsâ bets on future interest rate changes, showed a 40.4% probability of a 0.25% rate hike in December.
Growing political uncertainty in the United States added to the negative pressures on the greenback today. Following the resignations of several chief executives from his administration, President Donald Trump disbanded two of his business advisory councils. The resignations followed the presidentâs remarks earlier this week that blamed violence in Charlottesville, Virginia not only on white supremacists but also on anti-racism activist.
EUR/USD traded at 1.1743 as of 17:45 GMT on Thursday after touching 1.1669 at 11:30 GMT, a level last seen on July 28. EUR/USD began trading today at 1.1772.
The Dollar Index, which measures the strength of the US currency against its main counterparts, rose to 93.61 as of 17:39 GMT today from 93.54 yesterday. The index touched 94.03 at 11:30 GMT, its best level since July 25.
If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.