The dollar is climbing against all of its major competitors on Tuesday, recovering from the weakness of the previous session. The factory orders report released this morning exceeded expectations, while economic data from Europe was largely disappointing.
New orders for U.S. manufactured goods showed a notable rebound in the month of February, according to a report released by the Commerce Department on Tuesday, with the increase largely due to strength in the volatile transportation sector.
The report said factory orders surged up by 3.0 percent in February following a revised 1.0 percent decrease in January. Economists had expected orders to increase by 2.9 percent compared to the 2.0 percent drop that had been reported for the previous month.
The dollar dipped to an early low of $1.2877 against the Euro on Tuesday, but has since climbed to around $1.2835.
Unemployment in the euro area held steady at a record high in February, raising concerns that the ongoing recession is set to be a prolonged one as the region’s debt crisis continues to weigh on economic activity, latest data showed Tuesday.
The seasonally adjusted unemployment rate was unchanged at 12 percent in February, after the January figure was revised upwards from the originally reported 11.9 percent, data from statistical office Eurostat revealed. The latest rate was the highest since euro was launched more than a decade ago.
Operating conditions across Eurozone manufacturing sector deteriorated further in March, detailed results of a survey by Markit Economics showed Tuesday. But the rate of decline in activity was less steep than previously estimated. The headline purchasing managers’ index, that measures the performance of the manufacturing sector, fell to 46.8 in March from 47.9 in February.
Germany’s manufacturing activity contracted less than estimated in March, final data from Markit Economics showed Tuesday. The Markit/BME Purchasing Managers’ Index dropped to 49 in March, but above the flash estimate of 48.9. The index fell into the negative zone from 50.3 in February.
Germany’s EU harmonized inflation held steady in March, contrary to economists’ forecast for a decline, latest data showed Tuesday. Inflation as per the harmonized index of consumer prices (HICP) stayed unchanged at 1.8 percent in March, the Federal Statistical Office said. Economists had forecast inflation to ease to 1.7 percent.
The French manufacturing sector contracted at a slower pace in March, but activity in the sector continued to deteriorate sharply, data from a survey by Markit Economics and CDAF showed Tuesday. The seasonally adjusted purchasing managers’ index for the manufacturing sector increased to 44 in March from 43.9 in February.
The outlook for UK economy is likely to improve gradually, but growth will remained subdued this year, the British Chambers of Commerce (BCC) said in the Quarterly Economic Survey released on Tuesday. The first quarter survey showed that the economy has made progress, but the group believes there are still some mountains to climb before it is fully back on track.
Activity in the U.K. financial services sector rebounded strongly during the first quarter, survey data from the Confederation of British Industry and Pricewaterhouse Coopers showed Tuesday. Due to an increase in business volumes and profits, financial firms were more optimistic about their overall business situation in the next quarter. However, regulation and compliance costs are likely to remain a drag on business, it said.
The buck slipped to over a one-week low of $1.5257 against the pound sterling Tuesday morning, but has since rebounded to around $1.5120.
British manufacturing downturn continued in March, but the rate of contraction in activity was less severe than in the previous month, a survey by Markit Economics and Chartered Institute of Purchasing & Supply (CIPS) showed Tuesday. The headline purchasing managers’ index rose to 48.3 in March from February’s four-month low of 47.9. Economists expected the reading to rise to 49.
Japanese Prime Minister Shinzo Abe suggested Tuesday that the Bank of Japan may fail to achieve its target of 2 percent inflation if the economy changes its course.
“The economy has it own life. What will happen in the future is quite unpredictable,” Abe told a Parliamentary committee.
He said therefore, there can be instances when BoJ fails to attain the inflation target. However, Abe stressed the need for the BoJ to take up bold monetary easing to achieve the target.
Bank of Japan Governor Haruhiko Kuroda on Tuesday reaffirmed his commitment to end deflation and attain 2 percent inflation in two years, cementing expectations for bold policy moves during his first Policy Board meeting as Governor later this week.
The greenback has rebounded from an early low of Y92.555 against the Japanese Yen on Tuesday, back to around Y93.465.
Japanese labor cash earnings declined more than expected in February, provisional estimates from the labor ministry showed Tuesday. Total cash earnings fell 0.7 percent year-on-year in February compared with an expected 0.2 percent fall. This followed a 0.1 percent increase.