Nov 3, 2009
The dollar fell slightly against most major currencies on Monday as investors' risk appetite was boosted by strong U.S. economic reports. Worries over the U.K. banking sector drove the greenback higher against the pound.
The Institute of Supply Management (ISM) said its ISM manufacturing index rose from 52.6 in September to 55.7 in October, the highest level since April 2006. Orders and production growth were both strong, especially production.
The sub-index for employment jumped from 46.2 to 53.1, also its best since April 2006. It broke the threshold of 50, indicating that manufacturing employment pulled out of contraction. Investors were waiting the non-farm payroll report due Friday for any more signals of employment improvement.
The U.S. Pending Home Sales Index rose by 6.1 percent in September, the National Association of Realtors (NAR) reported. The index, a forward-looking indicator based on signed contracts, has been rising for eight consecutive months. It was 21.2 percent higher than a year ago.
The Commerce Department reported that U.S. construction spending increased 0.8 percent month-by-month in September. But August data was revised down to show a decline of 0.1 percent rather than a gain of 0.8 percent in earlier estimate.
The report showed that private building activity in August and September was much weaker that than it had been assumed in constructing the first estimate of Gross Domestic Product of the third quarter, said analysts of Nomura Economic Research.
The euro jumped higher in early Monday trading, but it gave up some gains later amid comments from a Federal Reserve official. U.S. banks are at risk of sizable new loan losses, particularly on commercial property, said Jon Greenlee, associate director of the Fed's Division of Banking Supervision and Regulation.
The pound fell speculations that forced asset sales by U.K. banks may weaken the country's financial institutions. It was reported that Royal Bank of Scotland Group and Lloyds Banking Group may have to sell assets in exchange for the government aid they received during the financial crisis. Northern Rock Plc is splitting into two.
The euro bought 1.4753 dollars in late New York trading compared with 1.4730 dollars it bought late Friday. The pound fell to 1.6383 dollars from 1.6447 dollars.
The dollar fell to 1.0791 Canadian dollars from 1.0797 Canadian dollars, and fell to 1.0236 Swiss francs from 1.0252 Swiss francs. It rose to 90.35 Japanese yen from 89.98 Japanese yen.