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Dollar gains against euro on unexpectedly strong manufacturing sector, rising prices

Dollar gains against euro on unexpectedly strong manufacturing sector, rising prices

The dollar recovered slightly against the euro on Tuesday after U.S manufacturing activity showed surprising strength in April that drove up prices for certain commodities.
The euro dropped to $1.3620 from $1.3651 in New York late Monday, though remained within range of its all-time high of $1.3683, which it hit last week.
The British pound edged up to $1.9996 from $1.9991.
The manufacturing sector grew faster than expected and boosted prices for fuel, metals and corn-based products, according to the Tempe, Arizona-based Institute for Supply Management.
The ISM's manufacturing index registered 54.7, beating the March reading of 50.9 and Wall Street's forecast of 51. It was the highest reading in 11 months, when it also registered 54.7.
A reading above 50 indicates growth for the sector, while a reading below 50 indicates contraction.
The news supported the dollar, as it lessens the likelihood that the Federal Reserve will lower interest rates to encourage spending _ especially as costs rise. The ISM's prices paid index surged to 73 in April from 65.5 the previous month.
Lower interest rates, which can jump start an economy, can also weaken a currency by subtracting from the returns on some investments.
Still, another report showed a continued decline in home sales. Pending sales of existing homes dropped by 4.9 percent in March to their lowest point in four years, the National Association of Realtors reported.
"Data for data, they tend to kind of wash," said David Solin, a partner at Foreign Exchange Analytics in Essex, Connecticut.
The dollar climbed against the yen amid thin activity over Japan's Golden Week holidays, buying 119.72 yen compared to 119.56 yen late Monday.
The euro hit a record high of 163.31 yen Tuesday amid expectations the European Central Bank will continue to tighten monetary policy while the Bank of Japan drags its feet on raising interest rates.
In other New York trading, the dollar rose against the Swiss franc, buying 1.2134 compared to 1.2077 late Monday, and the Canadian dollar, which climbed to 1.1105 from 1.1093.


Updated : 2020-12-06 09:55 GMT+08:00