Dollar Eases on Richmond Fed Report; Weak Manufacturing Data Weigh on Greenback
The dollar edged lower against its rivals after weaker-than-expected regional manufacturing data.</br></br>The Richmond Federal Reserve reported on Tuesday that manufacturing activity in the central Atlantic region dropped sharply this month, led by declines in shipments and new order volumes.</br></br>While the data did not fundamentally alter any expectations for future Fed policy, traders used the opportunity to book profits on their bets in favor of the dollar. After soaring to a three-year high in early July, the greenback has steadily fallen over the past two weeks as investors wait for more signals about the direction of Fed policy. The Fed's policy-setting Open Market Committee meets again next Tuesday and Wednesday.</br></br>The dollar had been boosted earlier this month by heightened expectations that the Fed could reduce its bond-buying program as soon as September, since Fed stimulus tends to hurt the greenback's value. Fed Chairman Ben Bernanke said last week that he expects to "moderate" the pace of asset purchases later this year.</br></br>"People are ... waiting to see the next pieces of evidence that either support or refute this theory of longer-term strengthening of the dollar," said Matthew Alexy, director of global foreign exchange at TD Securities.