The release of strong economic data from the US provided a boost to the US Dollar on Friday, which closed the week with gains in most major currency pairings.
US Manufacturing Activity Posts Surprise Increase
Fueling gains in the greenback was news that U.S. manufacturing activity soared to its highest level in more than 13-1/2-years.
Data firm IHS Markit reported on Friday that its flash U.S. manufacturing PMI rose to a reading of 59.1 in the first half of January. The latest reading is the highest since May 2007. January’s reading increased from the 57.1 recorded in December and was also far higher than analysts’ predictions for the U.S. manufacturing PMI to actually decline to 56.5.
The manufacturing PMI is regarded as a key economic indicator as manufacturing accounts for 11.9% of the total U.S. economy.
The flash composite PMI Output Index, which tracks the manufacturing and services sectors, increased to a reading of 58.0 early in January from the 55.3 recorded in December. Meanwhile, the flash services sector PMI rose to 57.5 in January from the 54.8 recorded in December.
U.S. Home Sales Posts Surprise Increase
It wasn’t just the US manufacturing activity that pleased markets with better than expected results. U.S. home sales unexpectedly increased in December, rising to their highest level in more than 14 years.
The National Association of Realtors reported on Friday that existing home sales rose 0.7% to a seasonally adjusted annual rate of 6.76 million units in December.
Home resales, which account for most of U.S. home sales, soared 22.2% on an annual basis. In total, home resales amounted to 5.64 million last year, the highest since 2006.
US Dollar Makes Gains
The strong economic news from the US, the world’s largest economy, provided a boost to the USD. Against the JPY, the USD closed up 0.26%. The USD closed 0.34% higher against the British Pound and up 0.80% against its Canadian counterpart.
Elsewhere in the forex markets, the US Dollar did close lower against the EUR, down 0.05%. The Euro found support from traders on the back of growing ECB stimulus talk.
The US Dollar index which tracks the USD against a basket of weighted currencies, closed Friday up 0.08%.
