Dollar Strengthens on Europe and US PMI Data

By TraderVox.com

Trader.com (Dublin) – The US dollar rose against the euro for the first time in three days as the demand for safety was boosted by the poor manufacturing data from Sweden and Norway. The market is seeking safety as speculation debt crisis in Europe is dampening economic growth in the region grew. The greenback strengthened against most of its peers as economists predict that the manufacturing PMI report to be released later today will indicate that the manufacturing sector slowed last month. The yen dropped against the dollar prior to the release of October meeting minutes where the BOJ decided to add 11 trillion yen to its bond-purchases program.

According to Steven Barrow, the head of research in London at Standard Bank Plc, there is a slight bias towards a firmer dollar, which is supported by the growth concerns in Europe. The strong dollar is also supported by speculation that Hurricane Sandy may cost the GDP up to $50 billion, increasing demand for safety.  According to some manufacturing data from eurozone, the Norwegian manufacturing shrunk in October, making the fifth month in a row that the sector have shrunk. The gauge dropped from 49.1 in September to 48.7 last month according to Fokus Bank in Oslo. The Swedish manufacturing PMI gauge dropped to 43.1 according to Swedbank AB in Stockholm, from 44.7 in September.

The dollar has strengthened as Federal Reserve Bank of Minneapolis President Narayana Kocherlakota  said yesterday that he disagreed with the view that Federal Reserve monetary policy is too accommodative. The Fed decided last week to continue buying $40 billion in mortgage-backed securities as it aims to curbing unemployment in the region. The greenback strengthened by 0.2 percent against the euro to $1.2937 at the start of trading in London today after it dropped by 0.4 percent in the previous two days. It gained by 0.3 percent against the yen to exchange at 80 per dollar. The euro strengthened by 0.9 percent last month, making it the best performer after the Swiss franc. The yen dropped by 2.3 percent while the US dollar rose by 0.2 percent in the same period.

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