USD lower on drop in manufacturing activity

Story link: USD lower on drop in manufacturing activity

The US dollar was weaker on Wednesday, falling after the private Institute for Supply Management reported that its manufacturing index dropped to 47.7 in December from 50.8 in November.

Any reading below 50 indicates that manufacturing activity is contracting rather than expanding.

Also hurting the dollar was the expectation that later in the week the Labor Department will report that the US unemployment rate was up to its highest level in a year in December.

The greenback’s biggest decline came in relation to the yen, which traded at ¥109.4100 to the dollar just before 1 p.m. in New York, and the Swiss franc, trading at SFr1.1159 to the dollar.

The US currency also fell versus the euro, which traded at €1.4730 to the dollar in early-afternoon trade in New York.

Besides being up versus the greenback, the yen advanced against all 16 most-active currencies as investors fled risk on concerns about the US economy.

At early-afternoon in New York, the yen traded at ¥161.1663 to the euro, at ¥216.6646 to the pound, and at ¥96.2698 to the Australian dollar.

The pound dropped again versus the euro, hitting another record low at 74.48p before trading at 74.39p to the euro in New York.

In addition, the UK currency was at its lowest in a week in relation to the US dollar and traded at 50.50p to the dollar in afternoon trade in New York.

The pound’s declines against all 16 most-actively traded currencies came on expectations that the Bank of England will cut interest rates again soon.