The U.S. Dollar rallied following a hike in world stocks and commodity prices, and despite less than stellar reports which showed that the nation’s manufacturing sector contracted. The Institute for Supply Management’s Factory Index revealed a drop from 49.8 in July to 49.6 in August, which was the lowest level since the summer of 2009. The news increased speculation that the Federal Reserve would announce another round of quantitative easing in the near future.
The Euro declined against the majority of its foreign exchange market peers on concerns the European Central Bank won’t present the measures needed to stem the sovereign debt crisis. Investors are speculating that the ECB’s plan to purchase bonds won’t be robust enough to solve the entire region’s debt predicament. The 17-nation currency fell versus the U.S. Dollar subsequent to a statement by the ECB’s President, Mario Draghi, indicating that the central bank is considering purchasing bonds with maturities of up to three years.
Other Forex on line reports confirmed that the Reserve Bank of Australia left the interest rate at 3.5%, prompting the Australian Dollar to retreat from prior lows against the greenback. The New Zealand Dollar weakened against the U.S. currency despite a positive release showing that the country sustained ample earnings from commodity exports.
Lastly, the British Pound advanced for a second consecutive day versus the Euro following a survey indicating the nation’s services sector expanded more than predicted. The British currency rallied against most of its free Forex counterparts after a drop in European stocks.