The greenback rose, having earlier been knocked off its highest levels in more than two years following disappointing manufacturing data.
U.S. manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports. The weak economic report intensified global growth fears and raised expectations for further monetary policy easing by the U.S. Fed. The U.S. data also prompted President Donald Trump to lash out at the Fed. He said the central bank has kept interest rates “too high”, with a strong dollar hurting U.S. factories.
U.S. manufacturing contracted at the fastest pace in more than a decade in September. The United States was the latest country to suffer a manufacturing downturn amid a trade war between Washington and Beijing. The fallout from the U.S.-China trade war is spreading to the U.S. economy and could further hurt global growth.
A slowdown in U.S. economic growth would remove one of the few remaining bright spots in the global economy and come just as Europe is seen as close to falling into recession.
Non-farm payrolls data due on Friday should give more insight into the health of the U.S. economy.
The dollar index climbed 0.2% to 99.353 after reaching 99.667 on Tuesday, a 29-month peak, before the manufacturing data was released.
START TRADINGForex – U.S. dollar steadied after bitter manufacturing data
Even with more rate cuts, the dollar is still the highest-yielding currency among developed markets.
The Australian dollar fell 0.3% to $0.667, its weakest since early 2009. Investors dumped currencies linked to the outlook of the global economy. The Aussie had reached a decade low on Tuesday after the Reserve Bank of Australia cut rates to a record low.
The Japanese yen strengthened 0.1% to 107.64, reflecting investor demand for safer assets after the U.S. manufacturing data.
The euro fell 0.2% to $1.0915 but was above Tuesday’s two-year low of $1.0879.
The Swiss franc fell after Swiss National Bank governing board member Andrea Maechler said expansive monetary policy was critical to help counter global uncertainty. The franc dropped 0.6% against the euro to 1.0915 francs and was last down 0.7% against the dollar at 1 franc.
Sterling weighed down 0.5% to $1. amid doubt over whether Prime Minister Boris Johnson’s final Brexit offer to the EU would be well-received by Brussels. Johnson is expected to disclose his final Brexit offer to the European Union later. Against the euro, sterling was also lower by 0.4% at 89.18 pence.
Gold gained on Wednesday after weaker-than-expected U.S. economic data exacerbated concerns about global growth. Increased prospects of further interest rate cuts drove investors towards the safe-haven metal. Spot gold was up 0.4% at $1,484.75 per ounce as of 1106 GMT. Prices had hit a near two-month low of $1,458.50 on Tuesday, before climbing as much as 1% during the session.
Among other precious metals, silver gained 0.2% to $17.26 per ounce.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money