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Dollar Holds Steady on Construction and PMI

July 1, 2008 by Andriy Moraru

The dollar traded with an elevated volatility against the euro today, going both high above the opening level and diving down below it. The overall fundamental background is positive for the greenback today. Yesterday’s report on Chicago PMI index also supported the U.S. currency. Currently EUR/USD is trading near its open level at 1.5754.

Total construction spending in May was down 0.4% after 0.1% decline in April (revised down from 0.4% decline) — that’s not very good itself, but the markets awaited at least 0.6% drop in the spending, so this result may even benefit dollar bulls on Forex.

ISM report on manufacturing sector — PMI index — was very positive for June. It rose up from 49.6% to 50.2%, while a decline to 48.6% was expected. Growing PMI is another signal of the recovering economy despite the declining housing market.

Chicago PMI report for June was released yesterday and it showed a growth from 49.1% to 49.6% in the purchasing managers’ sentiment. The consesus forecast for the report was a decline to 48.0%.

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