Weak Domestic Data: How Was the US Dollar Affected?



US Dollar Index gains despite weak data

The US Dollar Index, which measures the strength of the US dollar against other major currencies, was trading on a flat note on February 29, 2016, at 11:00 AM EST. The US Dollar Index fell to a low of 97.8 after the release of weak PMI (purchasing managers’ index) data and housing data. The pressure on the dollar as a result of the weak domestic data was partially offset by the People’s Bank of China cutting the reserve ratio requirement earlier in the day. The US Dollar Index was trading at 98.3 at 11:00 AM EST.

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Weak domestic data

The Institute of Supply Management published the Chicago PMI for the month of February at 9:45 AM. The PMI came in below market expectations, at 47.6 against the previous month’s 55.6. Employment levels were at their lowest level since 2009. The month-over-month pending home sales data also came in below forecasts, at -2.5%. This was a sharp fall considering the previous month’s rise of 0.9%.

Impact on the market

Among ETFs, the PowerShares DB US Dollar Index Bullish ETF (UUP) rose by 0.28% on February 29, 2016, at 11:00 AM EST. The WisdomTree Bloomberg US Dollar Bullish ETF (USDU), which encompasses developed economies and emerging market currencies, had a slight fall of  0.13%. In comparison, the United States Oil ETF (USO) rose by a significant 1.6%.

Individual US stocks also started on positive trajectories on February 29, 2016. Lennar (LEN) and Toll Brothers (TOL), for example, were trading positively despite the weak domestic data, rising by 0.71% and 0.37%, respectively. Crude oil-related stock ExxonMobil (XOM) rose by 0.21%, and banking stocks followed a similar pattern, with Bank of America (BAC) rising by 0.24%.


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