Dollar slips on manufacturing, stocks

Global stock gains and positive manufacturing data chip away at safe-haven demand.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Click on the chart to see other currency prices and yields.
When do you plan to retire?
  • Before age 65
  • At age 65
  • After 65
  • Never
Obama's money moves
200 days in, the President is going for broke. Click for analysis of where he's succeeding - and where hes not.

NEW YORK (Reuters) -- The dollar and yen edged lower Thursday in thin trade as gains in global stock markets and upbeat U.S. regional manufacturing data eroded safe-haven demand for the two currencies.

A report showed manufacturing in the Mid-Atlantic region expanded in August for the first time in 10 months, boosting optimism about a recovery. A rebound in China's stock market, which had fallen 20% over the last two weeks, also lifted spirits.

In recent months, the dollar and yen have tended to fall when markets grow more optimistic and as investors buy higher-yielding and riskier assets and currencies.

"The risk trade -- risk on, risk off -- is still the primary driver of the U.S. dollar," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.

"It was nice to see (the Philly Fed index) move back into expansionary territory. Improved economic data will likely imply a weaker dollar for a little bit of time yet to come," he added.

U.S. and European stocks rose, following a 4.5% surge in the Shanghai Composite Index, which shed about the same amount the previous day.

In late New York trading, the euro rose 0.2% to $1.4263, near a one-week high of $1.4276 hit earlier in the session.

The dollar was 0.1% higher at ¥94.15 after hovering in a tight ¥93.83 to ¥94.55 range.

Major currencies traded in tight ranges and some analysts said the link between the dollar and risk appetite has started to weaken and that investors appear unwilling to extend already large positions against the U.S. currency.

"Some reluctance to sell the dollar on good U.S. data maybe partly reflects a market that was short the dollar from yesterday, and partly related to a summer lull," said Alan Ruskin, chief international strategist at RBS Securities in Greenwich, Conn.

"Either way it tells a tale of dollar shorts and risk positive trades that look tired." A short position is a bet that prices will fall.

A surprise expansion in regional manufacturing offset separate data showing an increase in the number of workers filing first-time jobless claims last week.

"We'll have a recovery but it is going to take a while to gain traction," said Meg Browne, senior currency strategist at Brown Brothers Harriman in New York. "U.S. interest rates will stay low for a while yet, and so now you're seeing a lot of positioning because there is not a lot to trade on."

The ICE Futures U.S. dollar index, which tracks the greenback versus a basket of currencies, was down 0.1%.

The pound was down 0.1% at $1.6513 after weak data on British public finances underscored concern about the country's fiscal situation.

One of the bigger movers was the Canadian dollar, which rose to its highest in about a week after Goldman Sachs (GS, Fortune 500) recommended buying the currency against the U.S. dollar.

The firm said U.S. fundamentals "will not improve sufficiently this year," and "genuine and broad dollar strength will 'not yet' materialize. The Canadian dollar looks "particularly attractive given its strong exposure to oil," Goldman wrote in a research note.

In other trading, the Norwegian crown hit its highest against the euro since March after data showed Norway's non-oil economy grew 0.3% from April to June. To top of page

Track 17 major currencies

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Copyright 2009 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.