Dollar Gains on Yen, but Falls against EUR and GBP

The dollar gained on yen in Asia on Thursday. On the other hand, it fell against the euro and pound on an overall weighted-basis as investors look to the U.S. Senate on Donald Trump’s tax cut plans.

Forex rates on LED screen dollar, euro, yen

A man studies the forex rates shown on the LED screen.

USD/JPY changed hands at 112.00, rising 0.6 percent. AUD/USD rose 0.24 percent at 0.7589 after its top trading partner, China, released its PMI figures.

The U.S. dollar index – this measures the strength of the greenback against a basket of six major international currencies – declined by 0.16 percent to 93.07.

GBP/USD rose 0.53 percent to 1.3478 boosted by the momentum on resolving Brexit. EUR/USD traded at 1.1869, rose 0.19 percent.

The U.S. Commerce Department released its second estimate of Gross Domestic Product on Wednesday. The data showed that GDP increased at a 3.3 percent annual rate during the July-September period, beating previous estimate of 3 percent.

Pending Home Sales increased 3.5 percent in October after its 0.4 percent decline last month during an uptick in housing activity. The increase surpassed economist forecast of a 1 percent increase.

These reports came out on Wednesday, the same time outgoing Federal chair Janet Yellen testified on the economic outlook before the Congressional Joint Economic Committee.

Yellen confirmed that the central bank’s stance on monetary policy of steady hikes during a rise in concerns that the economy is about to overheat. Yellen’s hawkish comments caused Treasury yields to climb, boosting an uptick in the dollar.

“We are not seeing undue inflationary pressure in the labor market, so our policy remains accommodative,” Yellen stated. “But we do think it’s important to gradually move our policy rate toward what I’ll call a neutral level, which would be consistent with sustainably strong labor market conditions,” she added.

China and Japan’s Economies

China’s manufacturing PMI climbed to 51.8 in November, exceeding the expected 51.4 level. The country’s non-manufacturing PMI rose to 54.8 from a precious 54.3 listed in October. Official data report was released on Thursday.

These readings indicate the economic health of a country. Above 50 means expansion, while below that indicates contraction.

“The latest official PMI readings suggest that growth momentum held up well this month,” stated economist Julian Evans-Pritchard.

The Caixin/Markit manufacturing PMI is expected on Friday while the services PMI reading will come next Tuesday. The release of private PMI surveys can help in better understanding the economic situation in China. These mostly focus on small and mid-sized firms.

Japan also released a report of provisional industrial production for October showing an increase of 0.5 percent. This is compared to provisional gain of 1.9 percent expected on month.

While the Australia building approvals were reported to increase by 0.9 percent. This increase is compared with the 1.8 percent fall expected as private sector credit reached a 0.4 percent gain on month.

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