Latest Data Disappoints Dollar Bulls

The U.S. Dollar Index edged higher off of a recently struck 1-month low which came as a result of still more disappointing economic data which supported a continuation of the Federal Reserve’s existing monetary policy. The U.S. Dollar Index was trading at 82.756 .DXY, recovering from 82.428 .DXY struck on Monday following the release of ISM Factory data which showed that activity fell last month to a level unseen in nearly four years.

The news also sent the U.S. Dollar back below the key 100 Yen mark to 98.86 Yen, a 4-week trough, and well below last month’s 4½ year peak of 103.74 Yen; the USD/JPY pair recovered to 99.60 Yen, however, on news that the Japanese government will likely encourage pension fund operators to seek investment from overseas assets and equities. The pressure on the U.S. Dollar also helped to lift the EUR/USD pair which traded above the $1.3100 level for the first time in more than three weeks.

Following the news that the Reserve Bank of Australia would keep interest rates unchanged at 2.75%, the AUD/USD pair traded lower at $0.9725, slipping farther from Monday’s rally which saw the pair gain nearly 2% to trade at $0.9792, the largest single trading day’s gain in nearly 12 months.