US Dollar Trades Bullish as Manufacturing Activity Surges
Arslan Butt • 1 min read
Upbeat data revealing growth in the manufacturing sector has turned the US dollar bullish, helping it rise off two-year lows early on Wednesday. At the time of writing, the US dollar index DXY is trading around 92.36.
Manufacturing activity in the US expanded as the fastest pace in nearly two years during August as the economy emerges out of lockdown conditions. The US ISM manufacturing PMI rose to 56, supported by a sharp increase in the number of new orders received by companies.
The positive data helped the US dollar gain some strength after several days of decline due to a more dovish than expected Fed. Last week, the Fed chairman, Jerome Powell, had revealed that the central bank will shift its focus towards boosting employment and work towards maintaining inflation at an average of 2%.
Additional bullishness in the US dollar was triggered by encouraging statements from Treasury Secretary Steven Mnuchin regarding progress on the coronavirus relief bill. In addition, White House chief of staff Mark Meadows also confirmed that Republicans could introduce a more targeted version of the bill in the Senate by next week.