The US dollar falls following manufacturing data

Daily Currency Update

The US dollar is trading lower today as US stocks rally. The S&P 500 and Nasdaq 100 are up by 3% and 2.6% at the time of this writing. There was bad news from the US Institute for Supply Management’s gauge of factory activity, which missed estimates, pushed the US dollar lower, and helped riskier currencies to increase (such as NZD, AUD and CAD, which are rising by 2%, 1.7% and 1.4% respectively).

The news that might keep pushing the US dollar higher over the following few days came from Fed officials, even though they were ignored today. Federal Reserve Bank of New York President John Williams said the Fed still has more work to control inflation and that, “Tighter monetary policy has begun to cool demand and reduce inflationary pressures, but our job is not yet done... It will take time, but I am fully confident we will return to a sustained period of price stability.” He also added, “As a result of slowing growth, I anticipate the unemployment rate will rise from its current level of 3.7% to around 4.5% by the end of 2023.”

Federal Reserve Bank of Atlanta President Raphael Bostic also said US manufacturers struggling with global supplies during the Covid-19 pandemic are changing their component businesses, which may add to more inflation.