US dollar surges following employment data

The US Dollar has risen to its highest level since July 7 above 102.50, following to the US government’s credit rating downgrade by Fitch. The USD Index held above 102.50 despite the pullback in the American session and advanced to a 25-day-high above 102.50 on Wednesday.

US private sector employment rose by 324,000 in July, surpassed market expectations and provided further support to the USD. The US Bureau of Labor Statistics reported a 9.58 million job opening in June, while the ISM Manufacturing PMI improved modestly to 46.4 in July. The Federal Reserve Bank of Dallas’ Texas Manufacturing Survey revealed that the headline Manufacturing Business Index edged higher to -20 in July from -23.2 in June.

Inflation in the US fell to 3% on a yearly basis in June from 3.8% in May, below the market expectation of 3.1%. The Federal Reserve raised its policy rate by 25 basis points to the range of 5.25%-5.5% following the July policy meeting as expected.