Dollar Falls After US Manufacturing Activity Contracts

U.S. manufacturing activity contracted for the first time in three years in August, with new orders and hiring declining sharply as trade tensions weighed on business confidence, raising financial market fears of a recession.

Concerns about the economy, which is in its longest expansion ever, were also exacerbated by other data on Tuesday showing construction spending barely rising in July. The reports somewhat offset last week’s upbeat data on consumer spending that had suggested that while the economy was slowing, it was not losing momentum as rapidly as financial markets were flagging.

The economy’s waning fortunes have been blamed on the White House’s year-long trade war with China. President Donald Trump said on Tuesday trade talks with China were going well, but he warned that he would be “tougher” in negotiations if the discussions dragged on past the 2020 U.S. election and he won a second term.

“The canary in the mine may be falling off its perch,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “With manufacturing now starting to contract, it is even more critical that the consumer keeps spending.”

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza