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Dollar pushes lower after ISM report, but losses limited

Published 12/01/2015, 10:49 AM
Updated 12/01/2015, 10:49 AM
Dollar loses some ground on downbeat U.S. manufacturing data

Dollar loses some ground on downbeat U.S. manufacturing data

Investing.com - The dollar pushed slightly lower against the other major currencies on Tuesday, after data showed that U.S. manufacturing activity entered contraction territory last month, but hopes for a December rate hike by the Federal Reserve continued to support the greenback.

USD/JPY slipped 0.19% to 122.86.

The Institute of Supply Management reported on Tuesday that its manufacturing PMI fell to a six-year low of 48.6 in November from 50.1 the previous month, confounding expectations for a rise to 50.5.

But speculation that the Fed will raise interest rates at its December meeting continued to lend broad support to the greenback.

Investors were eyeing a string of U.S. economic reports this week for further indications on the strength of the economy, as the Fed has said that any decision on interest rates will depend on data.

EUR/USD gained 0.58% to 1.0627, barely off the previous session's seven-month trough of 1.0556.

Eurostat reported on Tuesday that the euro zone’s unemployment rate fell to 10.7% in October from 10.8% a month earlier. This is the lowest rate recorded in the euro area since January 2012.

The report came shortly after research group Markit said its German manufacturing purchasing managers' index rose to 52.9 in November from 52.6 the previous month.

Also in Germany, data showed that the number of unemployed people declined by 13.000 last month, compared to expectations for a 5.000 drop.

Sentiment on the euro remained vulnerable however, as the European Central Bank has been signaling over the past weeks that it is ready to implement additional easing measures in order to boost inflation in the euro zone and support growth.

Elsewhere, the dollar was moved lower against the pound and the Swiss franc, with GBP/USD up 0.17% at 1.5080 and with USD/CHF shedding 0.23% to 1.0265.

The pound briefly weakened after Markit reported that its U.K. manufacturing PMI fell to 52.7 last month from a revised reading of 55.2 in October. Analysts had expected the index to decline to 53.6 in November.

But sterling remained supported after Bank of England Governor Mark Carney said that no new wave of capital regulation was scheduled for U.K. banks.

The BoE had said earlier Tuesday that it would require banks to hold as much as £10 billion extra capital as the credit cycle moves into a more normal phase, but stopped short of immediate action.

The Australian and New Zealand dollars were stronger, with AUD/USD up 1.27% at 0.7317 and with NZD/USD rallying 1.44% to 0.6677.

Meanwhile, USD/CAD was down 0.10% at 1.3347 after Statistics Canada reported that the country's gross domestic product fell 0.5% in September, compared to expectations for a 0.1% rise.

Year-on-year however, Canada's economy grew at an annual rate of 2.3% in the third quarter, following a contraction of 0.3% in the second quarter.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.43% at 99.84, still close to Monday's eight-month peak of 100.35.

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