The US dollar has been trading lower against the major currencies today following the release of worse than expected economic data out of the United States. The dollar has touched its lowest level against the euro in over a month following the ECB loan results while the American currency has fallen to a seven-month low against the Japanese yen in forex trading action this afternoon. A decrease in manufacturing activity and pending home sales as well as a rise in weekly jobless claims has weighed on the dollar and the US stock markets.
The American currency has declined versus the euro, British pound sterling, Japanese yen, Canadian dollar, Swiss franc and the New Zealand dollar while trading almost unchanged against the Australian dollar today.
Meanwhile, the US stock markets have had a negative session today with the Dow Jones industrial average falling by approximately 50 points at time of writing while the NASDAQ has tumbled almost 10 points and the S&P 500 has traded lower by over 4 points. Oil has fallen by approximately 3 dollars to trade at the $72.65 per barrel level and gold has declined sharply by approximately $35.00 to stand at the $1,210.60 per ounce level.
Manufacturing activity decreases
Manufacturing data released by the Institute for Supply Management showed that manufacturing activity dipped in June to a 56.2 score following a score of 59.7 in May. Although this marked the 11th consecutive month for expansion in the manufacturing sector, the score failed to reach market forecasts that were expecting a 59.0 score. A score in the ISM report above 50 percent is considered to be growth and less than 50 percent is considered to be a contraction.
Norbert J. Ore, chair of the ISM Business Survey Committee, commented in the report on the latest activity. “The manufacturing sector continued to grow during June; however, the rate of growth as indicated by the PMI slowed when compared to May. The lower reading for the PMI came from a slowing in the New Orders and Production Indexes. We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time. The sector appears to be solidly entrenched in the recovery. Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast.”
Pending home sales drop sharply
U.S. Pending Homes sales fell more than expected for the month of May as the government tax credit deadline expired in April, according to the monthly report produced by the National Association of Realtors. The NAR report showed that pending home sales contracts signed by buyers decreased by 30.0 percent in May following a 6.0 percent increase in April.
Market forecasters had expected the sales data would decline by 14.2 percent for the month. On an annual basis, the pending home sales level fell to 15.6 percent below the May 2009 level.
NAR chief economist Lawrence Yun commented in the report about the sales figures this month,”Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June.”
US jobless claims rise
U.S. weekly jobless claims increased by more than expected in the week that ended on June 26th, according to a release by the U.S. Labor Department today. New jobless claims rose by 13,000 workers to a total of 472,000 unemployed workers. The 4-week moving average of unemployed workers increased by 3,250 workers from the previous week to a total of 466,500.
Market forecasts were expecting jobless claims to total 460,000 workers following the prior week’s 457,000 claims.
Workers seeking continuing claims for unemployment benefits for the week ending June 19th also increased for the week. Continuing claims advanced by 43,000 workers to a total of 4,616,000 unemployed workers. The four week moving average of continuing claims dropped by 25,250 workers to a total of 4,567,500.
Nonfarm payrolls report
Tomorrow the market-moving government nonfarm payrolls report will be released at 12:30 GMT with market forecasters expecting a decline of 110,000 jobs for June. May’s payroll report showed an increase of 431,000 jobs although the great majority of those were temporary census government jobs and private payrolls added relatively few workers.