NEW YORK (Dow Jones)--The dollar is up slightly Thursday and has recouped earlier losses as a survey of Chicago-area purchasing managers provided a springboard to rethink Federal Reserve stimulus measures.
The Institute for Supply Management-Chicago said Thursday that its Chicago Business Barometer climbed to 60.4 from 56.7 in August. The report's findings were better than the market expected, as economists queried by Dow Jones Newswires forecast a September reading of 56.0.
The Chicago report came on the heels of a better-than-expected reading for U.S. gross domestic product. Second-quarter GDP grew at a 1.7% annual rate April through June, slightly better than the 1.6% rate economists had expected. In addition, initial unemployment claims fell by 16,000 to 453,000 in the week ended Sept. 25.
"The market really grabbed ahold of this idea of Federal Reserve quantitative easing (asset-purchasing)," said Ron Leven, currency strategist at Morgan Stanley in New York. "The numbers, though, this morning were generally better across the board, so the market may be rethinking itself."
"It's possible if the numbers continue like this that you could see a later quantitative easing, or a possibility where they don't do it at all," he said.
At noon Thursday, the euro was at $1.3599 from $1.3630 late Wednesday, according to EBS via CQG. The dollar was at Y83.52 from Y83.70, while the euro was at Y113.61 from Y114.07. The U.K. pound was at $1.5733 from $1.5787. The dollar was at CHF0.9808--near its intraday high of CHF0.9823--from CHF0.9778.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 78.892--near its intraday high--from 78.759.
The euro had advanced against the dollar earlier the first three days this week and had lodged itself above $1.36 level as investors largely ignored financial stresses in euro-zone countries.
In earlier trading, the dollar had hit a post-intervention low of Y83.16 but has since bounced to the Y83.50 area, with no signs of more Japanese government actions to weaken the yen.
"... [T]he euro may be close to reaching its limits," said Vassili Serebriakov, foreign exchange strategist at Wells Fargo in New York.
Until Thursday's U.S. data, the anti-dollar sentiment remained strong, and troubles in countries such as Ireland, Spain and Portugal did little to dent the euro's rise the last two weeks.
The euro took a small hit in Asia on Thursday after Moody's downgraded Spain by one notch to Aa1 and the bailout bill for Anglo Irish Bank came in at the high side of estimates, with a worst-case scenario of EUR34 billion. But the market reversed itself--until the wave of U.S. data hit traders' screens.
Meanwhile, China's yuan weakened against the U.S. dollar for the first time in three weeks, as the central bank guided its currency lower following the passage of a bill by U.S. House of Representatives lawmakers targeting Beijing's currency policy and cheap exports.
On the over-the-counter market, the dollar was at CNY6.6912 around 0930 GMT, up from Wednesday's close of CNY6.6868. It traded between CNY6.6810, the lowest intraday level since the yuan began trading regularly in 1994, and CNY6.6965.
The Australian dollar, tied closely to the pace of Chinese-led global growth and commodities that support that growth, fell from its roughly two-year highs Thursday and was down to $0.9637.
The sterling reversed all gains from overnight trading and fell in North American trading.
-By Andrew J. Johnson, Dow Jones Newswires; 212-416-3092; andrewj.johnson@dowjones.com
