Forex – Dollar Rides Sterling Slump, Philly Fed Data Higher

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Investing.com – The U.S dollar rose sharply against its rivals Thursday amid upbeat manufacturing data and a slump in sterling.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.87% to 96.03.

The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 13.7 in March, from a prior reading -4.1. That beat economists’ estimates for a reading of 4.6.

The greenback rally helped pare losses from a day earlier when the Federal Reserve hinted that interest rates would be kept on hold through 2019 and said it would stop its balance-sheet reduction program in September amid concerns over slowing domestic and international growth.

A slump in sterling, meanwhile, also underpinned the greenback as fears the Britain may be heading for a no-deal Brexit offset positive remarks on the U.K. from the Bank of England.

The Bank of England left its benchmark rate unchanged at 0.75% and lifted its first-quarter GDP forecast to 0.3%, above a previous estimates of 0.2%.

The update on monetary policy from the central bank was overshadowed by fast developments on the Brexit front as a leaked draft of the European Council’s conclusion on Brexit said the EU would grant a the U.K. an extension to Brexit if lawmakers vote for the withdrawal deal next week.

EU members are not open to renegotiating the withdrawal deal, the leaked conclusion noted. This comes as U.K. Prime Minister Theresa May has set off to Brussels to make an emphatic plea to eurocrats to consider tweaks to the deal.

GBP/USD fell 1.13% to $1.305 and EUR/USD gained 0.54% to $1.1350.

USD/JPY tacked on 0.14% to Y110.84, as U.S. government bond yields bounced back from a selloff a day earlier, boosting the greenback.

USD/CAD edged 0.57% higher to C$1.3378.

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