Investing.com - The dollar pulled away from four year highs against a basket of other major currencies on Wednesday, after data showed that manufacturing activity in the U.S. expanded at the slowest rate in three months in September although the greenback still remained broadly supported.
The Institute for Supply Management said its index of purchasing managers fell to 56.6 last month from a reading of 59.0 in August. Analysts had expected the manufacturing PMI to decline to 58.5 in September.
Separately, payroll processing firm ADP said non-farm private employment rose 213,000 last month, above expectations for an increase of 210,000. The economy created 202,000 jobs in August.
USD/JPY hit highs of 110.09, the most since August 2008, before erasing those gains to trade at 109.47, 0.16% lower for the day.
The dollar has rallied against the euro and the yen in recent months, amid expectations that the Federal Reserve is growing closer to raising interest rates, while central banks in Europe and Japan look likely to stick to a looser monetary policy stance.
EUR/USD touched lows of 1.2584, not far from Tuesday’s two year trough of 1.2570, and was last down 0.17% to 1.2609.
The drop in the euro came after research group Markit reported that the final reading of the euro zone’s manufacturing purchasing managers index ticked down to a 14-month low of 50.3 in September from 50.5 in August.
The German manufacturing PMI slid to 49.9 from 50.3 previously, falling below the 50 level that separates growth from contraction for the first time in 15 months.
The report came a day after data showed that the annual rate of euro area inflation fell to a five year low of 0.3% in September.
The weak data added to pressure on the ECB to implement additional stimulus measures to stave off the threat of deflation in the region, ahead of its monthly meeting on Thursday.
GBP/USD fell to lows of 1.6162 before recovering back to trade at 1.6223.
Sterling slipped after data showed that output in the U.K. manufacturing sector slowed to a 17 month low in September.
The U.K. manufacturing PMI fell to 51.6 last month from 52.2 in August. Economists had expected the index to tick up to 52.5.
The Swiss franc was close to 14-month lows, with USD/CHF rising 0.20% to trade at 0.9569.
Elsewhere, AUD/USD hit 10-month lows of 0.8664 overnight before pulling back to 0.8729, down 0.21% for the day after data showed that Australian retail sales rose less-than-expected in July.
NZD/USD gained 0.36% to 0.7838, while USD/CAD edged down 0.12% to 1.1183, after hitting almost six month highs.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was steady at 86.06, not far from Tuesday’s peaks of 86.34, a high last seen in June 2010.