Dollar Rises On ISM Report, Tuesday, May 01, 2007 3:57:17 PM

Strong ISM data pushed the dollar against its major counterparts during Tuesday`s trading. The greenback weakened in early trading, but bounced back with the 10 a.m. release of ISM data. In general, the dollar was close to its overnight levels against the euro and pound, but tested a two-month high against the yen.

The greenback surged in the late morning on strong ISM data and was up for the day against the euro. The dollar touched a daily low of 1.3661 around 3 am Eastern Time and a daily high of 1.3624 a half-hour later. The dollar then trended down for about six hours to reach a daily low of 1.3670 at 9:30 a.m. But the 10 a.m. release of stronger-than-expected ISM data pushed the dollar up sharply. The dollar got as high as 1.3590 at around 11:45 a.m. ET before cooling off. The French, German, Italian and Swiss markets were closed.

Meanwhile, the dollar rebounded back to its overnight levels against the sterling in the late morning after hitting a two-week low earlier in the day. The greenback slipped back below the $2 level during the early morning, amid the release of data showing UK PMI for the manufacturing industry dropped slightly more than expected in April. At 9 am Eastern Time, the greenback traded at a daily low of 2.0074. But the release of stronger-than-anticipated ISM data pushed the dollar back up on the pound. The buck was up to 1.9986 at 3:45 p.m.

The greenback tested a two-month high against the yen on Tuesday after a late morning rally. Early trading took place following the release of data showing that Japanese domestic auto sales declined 10.2% in April from the previous year. The pair was level until about 9 a.m. when the dollar plunged to as low as 119.07. However, stronger-than-expected ISM data brought the dollar up. The greenback got as high as 119.85 at 11:45 a.m. ET, just off the two-month high of 119.86, set two weeks ago. The currencies remained near that level into the afternoon.

Tuesday morning, the Institute for Supply Management released its report on business activity in the manufacturing sector in the month of April, showing that the pace of growth in the sector grew much faster than expected. The ISM said that its index of activity in the sector rose to 54.7 in April from 50.9 in March, with a reading above 50 indicating growth in the sector. Economists had expected a much more modest increase to about 51.0.

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