The Dollar plunged further following the release of disappointing economic data which show that manufacturing has slowed down in July by much more than expected.
ISM Manufacturing gave a reading of 50.9 in July respite economist predictions for the index to come in only slightly lower than June’s 55.3. The forecast was for 55.0.
Risk aversion already dominated the currency markets all throughout the European trading session, and extend to the U.S. session as markets are cautious ahead of the U.S> debt vote in the Senate and House of Representatives later in the day.
Concerns are mounting over the possibility of a U.S. ratings downgrade even if the debt plan is voted in. The weak economic data today do not help matter. Last Friday, weaker than expected GDP data also highlighted the fact that the U.S. economic growth has slowed down. Based on these factors, the ratings agencies are concerned that the U.S. will be able to handle its fiscal situation even after raising the debt ceiling.
USDCHF dropped to new record lows, reaching 0.7729 by falling 30 pips within a minute of the data from 0.7802 at 14:00 GMT
USDJPY fell to 76.46 from 76.74 but soon rebounded to 76.96 at 14:40GMT due to buying on dips, as investors bought up the cheaper Dollar.