Dollar drops on disappointing manufacturing data

Published: 5 Dec at 9 AM Tags: Euro, Dollar,

Poor manufacturing data coming from the US for November saw the dollar fall against the yen. Figures released by the Institute for Supply Management surprised many by showing a contraction of manufacturing activity to a three-year low. Brown Brothers Harriman senior forex strategist, Masashi Murata, said the dollar had been strengthening in recent weeks because of perceived US economic recovery.

He warned that investors could offload the dollar if employment data due out at the end of the week indicates job growth is also slowing. The yen is currently being seen as a safe haven because of concerns the US is rapidly approaching a fiscal cliff.

Congressional Republicans have had a proposal to avert spending cuts and a $600 billion increase in taxes refused by the White House because it did not agree with a pledge by President Obama to hike the amount of tax being paid by America’s richest.

The greenback hit 82.07 against the yen, a slip of 0.2 per cent. The Japanese currency has also risen against the euro. However, indications the eurozone is making positive progress with its debt problems has helped to keep the single currency steady. Greece has said it will be buying back debt as Athens proves to the International Monetary Fund and Europe’s finance ministers that it can reduce its deficit.

The Greek government needs to do this in order to secure 44 billion euros of bailout cash later this month.