Investing.com – The dollar bounced off the lows Tuesday, despite the release of mostly downbeat economic data, fuelling concerns that slowing economic growth would deter the Federal Reserve from adopting an aggressive rate hike policy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 0.30% to 97.17 by 13:12 EDT.
Investors mulled over the release of a raft of economic data, as better than expected services business activity offset manufacturing and housing data that fell short of expectations.
IHS Markit flash U.S. manufacturing purchasing managers index (PMI) fell to its lowest level in eight months with a reading of 52.5, while its services (PMI) soared to a four-month high with a reading of 54, which was above economists’ forecasts.
A reading above 50 indicates expansion in the sector; below 50 indicates contraction.
In a separate report on Tuesday, the Commerce Depart said sales of newly constructed homes fell in April to a seasonally adjusted annual rate of 569,000. That was below analysts’ estimates of a drop to 610,000.
Meanwhile, in the UK, GBP/USD weathered a terrorist attack in Manchester, England, to trade roughly flat against the dollar at $1.2981.
Sterling came under pressure at the start of the week, after polls over the weekend showed the Labour Party had narrowed the large lead that had been enjoyed by the Conservative Party.
EUR/USD retreated from a six-month high to trade at $1.1194, down 0.38%, despite the release of upbeat Eurozone economic data.
The euro is one the best performing currencies against the dollar, up nearly 7% year-to-date, as Emmanuel Macron's election victory against anti-EU Marine Le Pen, earlier this month, quelled fears that France would exit the European Union.
USD/JPY rose by 0.33% to 111.65, while USD/CAD traded roughly flat at $1.3508, up 0.04%.