Value of U.S. Dollar Continues to Rise
Thanks to the release of favorable U.S. manufacturing activity data, the U.S. Dollar continued to rise in value against other major currencies heading into the holiday weekend. Trading is expected to remain stagnant early this week due to Independence Day, but the Institute for Supply Management has already reported a near 3-point increase from last month’s manufacturing activity index.
The dollar is heading in the right direction
The Institute for Supply Management, or ISM, is made up of 300 manufacturing firms that compose surveys to monitor the national manufacturing landscape. The ISM analysts originally forecasted a small 0.3-point increase for the month of June, but the U.S. Dollar increased by an astounding 2.9 points to 57.8 in June, up from 54.9 in May.
Although the U.S. Dollar remains in the middle of the pack in terms of overall value amongst major global currencies, it did increase its value in comparison by more than 0.5 percent against five of the six top currencies in the world. The Euro, British Pound, and Swiss Franc remain more valuable than the U.S. Dollar, while the Canadian, Australian, and New Zealand Dollars, as well as the Japanese Yen, are weaker in comparison.
How the dollar affects Europe
Following a relatively dormant eight-month stretch, the U.S. Dollar index also saw an increase of more than 0.5 percent, up to 95.90 heading into the holiday. On the other hand, the UK manufacturing industry grew at its slowest pace in three months, as orders and productions continued to decrease in June.
Believe it or not, the increasing strength of the dollar is having an overall positive effect on European stocks. Combined with the successful turnaround of the oil industry, the U.S. Dollar has pushed markets up in Europe. Despite the low activity in the UK, the European manufacturing sector expanded at its fastest rate in over six years.