The U.S Dollar jumped against the Euro and the Yen following the release of the United States PMI. The index rose more than expected in June indicating that the rate of growth in the country’s manufacturing sector picked up for the first time in four months.
The ISM index (Institute of Supply Management) rose to 55.3 in June from 53.5 the prior month, beating economists prediction for a 51.9 increase, showing a sign of optimism for the sluggish economy.
A reading above 50 indicates expansion in the manufacturing sector, while a number below 50 means contraction.
Following the release of the data, USDJPY surged to 81.13 from 80.90 while EURUSD fell to 1.4435 from 1.44725.
This was much needed good news for the struggling US economy which is in danger of reaching its debt ceiling very soon. Also yesterday, the government ended its bond purchase program.
The U.S. Treasury reiterated today that it would exhaust its legal ability to borrow on August 2 if Congress does lift the debt ceiling by then.
Meanwhile, US Treasury Secretary Timothy Geithner has warned of huge risks if Congress fails to take immediate action, potentially triggering a default on U.S. debt that would be devastating to an already-fragile banking and economic system.
“Geithner urges Congress to avoid the catastrophic economic and market consequences of a default crisis by raising the statutory debt limit in a timely manner,”