NEW YORK/LONDON: The dollar advanced against major currencies on Tuesday after relatively solid data on US manufacturing and construction offset a decline in job openings last month to the lowest level in more than two years.
While an ISM survey offered a tough assessment of US manufacturing conditions, so-called hard data suggest the sector is shuffling along. Federal Reserve data in June showed factory production rebounded in the second quarter, ending two straight quarterly declines.
Meanwhile, US construction spending increased solidly last month and May’s data was revised higher, boosted by outlays in both single and multifamily housing projects, the Commerce Department said.
The monthly Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department, remained consistent with tight labor market conditions despite hefty interest rate increases by the Fed to dampen demand and curb inflation.
The dollar initially slid on the reports, but later rebounded.
“The net between the slightly more positive ISM and the slightly less favorable JOLTs numbers, you wind up in an environment the market doesn’t know what to do,” said Steven Ricchiuto, US chief economist at Mizuho Securities USA LLC.
“The ISM numbers are really net neutral to slightly more constructive, but the reality is the offset in the JOLTs numbers with the continued high levels of openings in terms of what we got in terms of the quit rate,” he said.
The Australian dollar was set for its sharpest daily drop in a month after the central bank held interest rates at 4.1% for a second month, saying past hikes were cooling demand but more tightening might be needed to curb inflation. The Aussie fell 1.65% versus the US dollar at $0.661, wiping out a 0.87% gain in July and putting it on track for its biggest daily decline since early March.
There are concerns that the de facto tightening by a major central bank could adversely affect global risk appetite, portfolio managers at Natixis Investment Managers said.
The yen weakened 0.74% at 143.33 per dollar. The Asian currency has been on a wild ride since Friday, when the BOJ began what may become a slow shift away from decades of massive monetary stimulus, saying it would offer to buy 10-year Japanese government bonds at 1.0% in fixed-rate operations instead of the previous rate of 0.5%.
Comments
Comments are closed.