Investing.com - The dollar firmed against most major currencies on Friday as cuts to public spending were set to take effect at the end of the day and potentially cool growth for the entire year.
In U.S. trading on Thursday, EUR/USD was down 0.27% at 1.3021.
A global risk-off trading session sent investors chasing the dollar throughout the session.
Automatic spending cuts totaling USD85 billion were due to begin taking effect in the U.S. at the end of Friday, which should affect many federal programs and result in lost government and private-sector jobs, shaving as much as a half a percentage point off growth rates for this year, according to some estimates.
Uncertainty as to whether President Barack Obama and congressional Republicans can find common ground to take the pain out of sharp fiscal adjustments kept investors camped out in the dollar all day Friday.
Soft European and Chinese data spooked investors and fanned concerns the global economy continues to battle headwinds, which overshadowed positive data in the U.S. somewhat
China reported earlier that the country's February purchasing managers' index fell to 50.1 in February from 50.4 in January, defying economists' expectations for a 50.5 reading.
While readings above 50 signal expansion, the decline caught markets off guard.
Meanwhile, data released earlier revealed that the eurozone's unemployment rate rose to a new record high of 11.9% in January from 11.8% the previous month.
Analysts had expected the rate to remain unchanged at 11.8% in January.
Not all headlines were as gloomy.
Also in Europe, the Markit research group reported the eurozone's purchasing managers' index hit 47.9 in February, beating markets calls for the reading to remain unchanged at 47.8.
Germany's PMI hit 50.3 compared to market calls for an unchanged reading of 50.1
Spain's manufacturing purchasing managers' index jumped to 46.8 in February from 46.1 the previous month, beating expectations for a rise to 46.5, while Italy's manufacturing PMI fell to 45.8 last month from 47.8 in January, compared to expectations for a reading of 47.6.
Elsewhere, official data revealed that German retail sales rose 3.1% in January from December, beating market calls for a 1% monthly increase after a 2.1% decline the previous month.
In the U.S., positive economic indicators capped the dollar's gains and sent investor pouring money into equities, though fiscal uncertainty still served as the currency market's chief weather vane.
The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.
Analysts had expected the February index to fall to 52.5.
The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.
Analysts had expected the index to remain unchanged.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.92% at 1.5025.
The dollar rose against the yen, with USD/JPY trading up 1.07% at 93.56, and was up against the Swiss franc, with USD/CHF trading up 0.74% at 0.9434.
The yen weakened Japan’s Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda, a fan of aggressive monetary easing, to replace current Bank of Japan Governor Masaaki Shirakawa, who favored more hawkish policies.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.22% at 1.0284, AUD/USD down 0.19% at 1.0194 and NZD/USD trading down 0.11% at 0.8239.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.43% at 82.35.
In U.S. trading on Thursday, EUR/USD was down 0.27% at 1.3021.
A global risk-off trading session sent investors chasing the dollar throughout the session.
Automatic spending cuts totaling USD85 billion were due to begin taking effect in the U.S. at the end of Friday, which should affect many federal programs and result in lost government and private-sector jobs, shaving as much as a half a percentage point off growth rates for this year, according to some estimates.
Uncertainty as to whether President Barack Obama and congressional Republicans can find common ground to take the pain out of sharp fiscal adjustments kept investors camped out in the dollar all day Friday.
Soft European and Chinese data spooked investors and fanned concerns the global economy continues to battle headwinds, which overshadowed positive data in the U.S. somewhat
China reported earlier that the country's February purchasing managers' index fell to 50.1 in February from 50.4 in January, defying economists' expectations for a 50.5 reading.
While readings above 50 signal expansion, the decline caught markets off guard.
Meanwhile, data released earlier revealed that the eurozone's unemployment rate rose to a new record high of 11.9% in January from 11.8% the previous month.
Analysts had expected the rate to remain unchanged at 11.8% in January.
Not all headlines were as gloomy.
Also in Europe, the Markit research group reported the eurozone's purchasing managers' index hit 47.9 in February, beating markets calls for the reading to remain unchanged at 47.8.
Germany's PMI hit 50.3 compared to market calls for an unchanged reading of 50.1
Spain's manufacturing purchasing managers' index jumped to 46.8 in February from 46.1 the previous month, beating expectations for a rise to 46.5, while Italy's manufacturing PMI fell to 45.8 last month from 47.8 in January, compared to expectations for a reading of 47.6.
Elsewhere, official data revealed that German retail sales rose 3.1% in January from December, beating market calls for a 1% monthly increase after a 2.1% decline the previous month.
In the U.S., positive economic indicators capped the dollar's gains and sent investor pouring money into equities, though fiscal uncertainty still served as the currency market's chief weather vane.
The Institute for Supply Management reported earlier that its manufacturing PMI rose to 54.2 in February, the highest level since June and well above a 53.1 reading in January.
Analysts had expected the February index to fall to 52.5.
The Thomson Reuters/University of Michigan consumer sentiment index rose to 77.6 in February from 76.3 the previous month.
Analysts had expected the index to remain unchanged.
The greenback, meanwhile, was up against the pound, with GBP/USD trading down 0.92% at 1.5025.
The dollar rose against the yen, with USD/JPY trading up 1.07% at 93.56, and was up against the Swiss franc, with USD/CHF trading up 0.74% at 0.9434.
The yen weakened Japan’s Prime Minister Shinzo Abe nominated Asian Development Bank President Haruhiko Kuroda, a fan of aggressive monetary easing, to replace current Bank of Japan Governor Masaaki Shirakawa, who favored more hawkish policies.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.22% at 1.0284, AUD/USD down 0.19% at 1.0194 and NZD/USD trading down 0.11% at 0.8239.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.43% at 82.35.