Dollar Drops to 14-Month Low on Weak Factory Output Data

0
94

Dollar Drops to 14-Month Low on Weak Factory Output DataThe dollar dropped from its highest level in 14 months versus its major counterparts after a report indicated that U.S. factory production surprisingly fell in August.

The dollar rose 0.2 percent to trade at $1.2934 per euro and fell 0.1 percent to 107.20 yen. The euro dropped 0.4 percent to steady at 138.65 yen. The Japanese financial markets were closed on Monday for a public holiday.

Data are “obviously hurting the market, and there’s also some correction in the Treasury market pushing yields lower and weighing on the dollar,” Masafumi Takada, a director at BNP Paribas SA in New York, told Bloomberg News. “The market has been positioning long dollar against yen and euro for quite a while now, so reducing a bit before the event.” Long positions are bets a currency will gain.

Production in U.S. factories, utilities and mines dropped 0.1 percent in August, compared with an increase of 0.2 percent in July.

A key dollar gauge, the Bloomberg Dollar Spot Index, which monitors the U.S. currency versus 10 major peers, plunged up to 0.1 percent to 1,049.31 after earlier advancing to 1,052.14, the strongest level since July 2013. It remained slightly unchanged as of 12:41 p.m. in New York.

The Australian dollar fell by up to 0.6 percent to 89.84 U.S. cents, its weakest level since March 12, after China recorded the slowest growth in industrial production since the onset of the global recession.  China is Australia’s largest trading partner. The Aussie later eased higher to 90.26 cents.

China’s industrial output grew 6.9 percent in the year through August, reported the nation’s statistics bureau on Sept. 13. This compares with a growth 9 percent in July and was the weakest advance since December 2008. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com