LONDON (Thomson Financial) - The U.S. dollar continued to rise after an ISM survey showed manufacturing activity in the world's largest economy has unexpectedly strengthened.
The survey showed the headline ISM manufacturing index rose to 48.6 in March. Although this remains below the 50 level that signals contraction in the sector, the reading is above February's 48.3 and well above forecasts for a drop to 48.0.
'The dollar has gained a bit more support with the ISM coming in a bit stronger than expected,' said Ian Stannard, senior currency analyst at BNP Paribas.
The U.S. currency was also supported by better-than-expected U.S. construction spending data, which showed overall spending fell just 0.3 percent after a revised 1.0 percent decline in January.
Economists had been expecting a bigger fall of 1.1 pct, following the originally reported 1.7 pct drop in January.
The stronger-than-expected U.S. data added to gains already seen by the greenback following this morning's slump in German retail sales figures, which dampened hopes that the euro zone will not be badly affected by the sharp slowdown in the U.S.
High street sales in Europe's largest economy tumbled by 1.6 percent month-on-month in February on a real, seasonally adjusted basis, way below the 0.5 percent increase forecast by analysts.
'This gives the lie to any suggestion that internal demand is driving the euro zone's largest economy,' said Steve Pearson, chief currency strategist at Bank of Scotland Treasury.
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