Forex: Tuesday’s review

Yesterday the dollar rose from a four-week low versus the euro after a U.S. factory gauge unexpectedly advanced in April, easing concern the economic recovery is flagging and damping bets the Federal Reserve will introduce more stimulus. The Institute for Supply Management’s index of U.S. manufacturing rose to 54.8 in April from 53.4 a month earlier, the Tempe, Arizona-based group’s report showed today.

Australia’s dollar slid against all of its major peers after the nation’s central bank cut interest rates more than forecast. The Aussie dollar dropped for a second day against the greenback after the Reserve Bank of Australia lowered its overnight cash rate target to 3.75 percent from 4.25 percent, the deepest cut in three years.

The pound fell after U.K. factory growth slowed. Sterling weakened versus the dollar after a report based on a survey by Markit Economics and the Chartered Institute of Purchasing and Supply showed U.K. factory output fell to 50.5 last month from a revised 51.9 in March. Data last week showed Britain’s economy re- entered a recession last quarter.

EUR/USD: yesterday the pair decreased.

GBP/USD: yesterday the pair traded nearby $1.6200.

USD/JPY: yesterday the pair gain above Y80.00.

European data for Wednesday starts at 0600GMT with the ILO measure of Germany employment data. This morning also sees manufacturing PMI releases from Italy at 0743GMT and the final figures from France at 0748GMT, Germany at 0753GMT and the main EMU number at 0758GMT, The preliminary figures for France, Germany and the EMU data were 47.3, 46.3 and 46.0 respectively. UK data at 0830GMT sees the Bankstats, M4, Lending and CML Mortgage Lending data as well as the Markit/CIPS Construction PMI data. US data starts at 1100GMT with the MBA weekly mortgage applications data. At 1200GMT, Federal Reserve Governor Daniel Tarullo speaks to the Council on Foreign Relations, in New York. US ADP National Employment Report is due at 1215GMT. At 1400GMT, factory new orders are forecast to fall 1.6% in March after rising in February. Durable goods orders were already reported down 4.2% in March, while nondurables orders are expected to rise slightly on higher food and energy prices. At 1430GMT, the EIA eekly crude oil stocks data is due. Then, at 1630GMT, Richmond Fed President Jeffrey Lacker speaks to the Economics Club of Hampton Roads Economic Conference sponsored by Old Dominion University's College of Business and Public Administration on the "Economic Outlook, May 2012', in Richmond.