Forexpros – The dollar fell against most of the world’s major currencies on Tuesday after stronger-than-expected manufacturing data out of the U.S. sparked global demand for risk, sending investors shorting the greenback to go long in other currencies and stocks worldwide.
The euro firmed against the dollar in Asian trading Tuesday, with EUR/USD rising 0.25% and trading at 1.3354.
In the U.S., manufacturing activity expanded more than forecast last month, with the Institute for Supply Management, an association of purchasing managers, reporting that its manufacturing index rose to 53.4 in March from 52.4 in February, outpacing expectations for a reading of 53.0.
Readings above 50 indicate a sector in expansion.
The news sent investors selling dollars to free up capital to invest in stocks and other riskier assets, sending stocks and commodities rising and the dollar softening.
The news came on the heels of surprisingly strong factory data out of China, which also sent stocks rising and the dollar falling.
The China Federation of Logistics and Purchasing reported earlier this week that its purchasing managers index rose 2.1 points to 53.1 in March, up from February’s 51.0 and January’s 50.5, according to the Associated Press.
A reading above 50 also signifies expansion.
The dollar did see some support, as not everyone came rushing out of the safety of the greenback.
Manufacturing data came in flat out of Europe, with the eurozone manufacturing index remaining unchanged at 47.7, in line with expectations but fueling some demand for the dollar.
Also in Europe, the unemployment rate in the currency bloc hit a record high of 10.8% in February from 10.7% in January, in line with expectations although high enough to keep many investors on the sidelines invested in the U.S. currency.
With the European debt crisis not grabbing major headlines and rattling nerves lately, strong factory output in the U.S. sparked a risk-on trading session that carried on in Asia on Tuesday.
The greenback, meanwhile, was down against the pound, with GBP/USD up 0.12% and trading at 1.6044.
The greenback was down against the yen, with USD/JPY trading down 0.24% at 81.88, and down against the Swiss franc, with USD/CHF trading down 0.24% at 0.9016.
The greenback was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.09% at 0.9896, AUD/USD up 0.22% at 1.0442 and NZD/USD up 0.32% at 0.8260.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.15% at 78.87.
Later Tuesday, the Federal Reserve will release the minutes of its most recent Federal Open Market Committee meeting, shedding insight into the U.S. central bank’s attitudes towards currently loose policies.
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