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US Dollar Strengthens on Tuesday and showed its strength against various global currencies. This was due to fresh economic data that highlighted the strong performance of the US economy when compared to the United Kingdom and the European Union.
In October, US businesses performed better. The manufacturing sector, which had been struggling for five months, started to improve due to more new orders. At the same time, services like hospitality and professional services showed a slight pickup, and the signs of rising prices started to ease. This data came from S&P Global on Tuesday.
This shows that the US economy is holding up well, even though the Federal Reserve is pushing up interest rates to control rising prices.
The Dollar Index, which measures the US dollar’s strength against several major currencies, went up by 0.6% to 106.19. Before that, it had fallen to a one-month low of 105.35 earlier in the day.
Factors of US Dollar Strengthens
Helen Given, who works as a foreign exchange (FX) trader at Monex USA, said, “The big picture is still clear, especially when you look at the Purchasing Managers’ Index (PMI) numbers from the US, the UK, and the Eurozone this morning.”
She added, “All three PMI readings for the US (in manufacturing, services, and overall) were positive. But the UK and the Eurozone reported negative numbers, showing that the US economy is stronger compared to others worldwide.”
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Ripple Effects on Global Markets and Cryptocurrency
On Tuesday with US Dollar Strengthens , a survey showed that business activity across the Eurozone was going down, suggesting that the region might be heading for a recession. As a result, the euro’s value dropped by 0.7% to $1.05975.
Germany’s data was particularly concerning. The Purchasing Managers’ Index survey revealed that the service sector was also in a bad shape, along with the manufacturing sector.
Global financial markets have been affected by a sudden increase in US bond yields. The 10-year Treasury yield went above 5% on Monday, reaching levels not seen since July 2007. This increase in yields had earlier pushed the Dollar Index to its highest point in almost a year.
However, yields went down sharply on Monday making US Dollar Strengthens. Analysts said one reason for this was a message on social media from a famous hedge fund investor, Bill Ackman. He said he had closed his bet against longer-term bonds and mentioned concerns about global issues. Yields go up when bond prices fall and vice versa.
The US dollar ended up 0.1% higher at 149.875 yen. People were worried that the government might step in to support the Japanese currency.
On the other hand, the British pound was down by 0.59%, ending at $1.21765. Recent surveys showed that business activity in the United Kingdom was falling again this month, and there were fewer worries about rising costs. This points to the possibility of a recession.
In the world of cryptocurrency, Bitcoin continued to rise. Some believed that this was due to speculation about a new investment fund for Bitcoin. The biggest cryptocurrency in the world by market value went up by 4.1%, reaching $34,423.
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Disclaimer:
Please note that this article serves solely for informational purposes. As such, it is not financial advice. We strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
