US Dollar strengthens on manufacturing figures

The US dollar saw gains on Wednesday after a key manufacturing index showed an advance. The ISM manufacturing index was at 51.4 in December after being at 49.5 in November. Some analysts took this, along with data showing that the auto and housing sectors are beginning to stabilize, as a sign that the slowdown is about over and that the Federal Reserve will not be nearly as likely to cut interest rates anytime soon.

In afternoon trade in New York, the greenback was up 0.7 percent versus the Japanese yen, while it had added 0.8 percent to $1.31.70 in relation to the euro and was 1.1 percent higher to $1.9500 against sterling.

The euro hit a new record high against the yen when it rose to ¥158.10, but ended up giving up ground and ending the trading day 0.1 percent lower than the Japanese currency to ¥157.50. The yen, meanwhile, dropped to an eight-year low of ¥234.80 versus sterling and to a nine-year low of ¥94.94 in relation to the Australian dollar.

The Swiss franc also saw declines on the session, dropping 0.3 percent to SFr1.6157 against the euro, a six and a half year low, and it was down 1.1 percent versus the US dollar, to SFr1.2270.

The Chinese renminbi hit another post-revaluation high in relation to the dollar by rising to Rmb7.80451. Some analysts have seen the possibility, since the renminbi has been rising, that Hong Kong could link its currency to the Chinese currency and then both would rise versus the greenback. Other analysts, however, have discounted the chances of this happening in no uncertain terms.

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