The US dollar rallied in the middle of the trading week, buoyed by red ink flooding the financial markets and disappointing economic data. The greenback had ostensibly taken a breather in recent sessions, but it is now spiking as bears return to Wall Street.
The Institute for Supply Management’s (ISM) non-manufacturing purchasing managers’ index (PMI) slipped to 56.7 in September, down from 56.9 in August. But the print was better than the market estimate of 56.
Business activity plunged, employment rose, new orders weakened, and prices tumbled.
“Based on comments from Business Survey Committee respondents, there have been improvements regarding supply chain efficiency, operating capacity and materials availability; however, performance remains less than ideal. Employment continued to improve despite the restricted labor market,” said Anthony Nieves, Chair of the ISM.
Meanwhile, the S&P Global Composite and Services PMI readings improved, although they were stuck in contraction territory for the third consecutive month. In September, the Composite and Services PMIs clocked in at 49.5 and 49.3, respectively.
On the housing front, mortgage applications tanked 14.2% for the week ending September 30, as the 30-year mortgage rate surged to 6.75%, according to the Mortgage Bankers Association (MBA).
Investors also homed in on the latest ADP employment data for last month. Employers added 208,000 jobs, topping the market estimate of 200,000. This is also up from the 185,000 positions.
Looking at the markets midweek, US Treasurys were up across the board, with the benchmark ten-year yield rising 15.4 basis points to 3.771%. The one-year bill added 2.4 basis points to 4.169%, while the 30-year bond tacked on 10.8 basis points to 3.795%. The recession-indicating spread between the two- and ten-year yields approached to -50 basis points.
The US Dollar Index (DXY) soared 1.33% to 111.53, from an opening of 110.07. The index, which measures the buck against a basket of currencies, dipped nearly 1% over the last week, but it is still up more than 16% year-to-date.
The USDCAD currency pair spiked 1.32% to 1.3690, from an opening of 1.3512, at 14:24 GMT on Wednesday. The EUR/USD fell 1.45% to 0.9842, from an opening of 0.9987.