US dollar strengthens on lower commodities prices

The US dollar was higher on Wednesday as investors hoped that dropping commodities prices could help the US economy. But while some analysts said that the drop in prices, especially for crude oil, had been important psychologically, new data such as that from the US Institute for Supply Management that showed a bigger decline than had been expected in service-sector activity, did not necessarily bear that hope out. At mid-afternoon in New York, the greenback was 0.1 percent higher against the Japanese yen to ¥118.02, added 0.2 percent in relation to sterling to $1.8842, and gained 0.4 percent versus the euro to $1.2685.

A Eurozone purchasing managers’ index that was down for the third month in a row in September did not dissuade most analysts from expecting a hike in interest rates from the European Central Bank when it meets on Thursday. The euro dropped 0.1 percent to £0.6731 against the euro. The shared currency also fared poorly against the yen, which rose 0.3 percent to ¥149.70 versus the euro.

Currencies linked to commodities prices were lower on the session as prices continued to decline. The Norwegian krone was 0.3 percent lower to NKr8.4106 against the US dollar, while it fell 0.6 percent to NKr6.6271 versus the euro, a two-year low. Norway is the third biggest oil producer in the world. The Canadian dollar was 0.5 percent lower versus the US dollar, to C$1.1278. The South African rand hit a nearly four-year low versus the greenback to R7.9670 on dropping prices for precious metals.

Exceptions to the drops among commodity-exposed currencies were the Austrailan and New Zealand dollars. The Aussie was steady versus the US dollar at A$0.7430 and added 0.1 percent to ¥87.70, while the Kiwi was up 0.7 percent against both the US dollar and the yen to N$0.6613 and ¥78.05 respectively.

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