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Forex - Dollar in Doldrums as U.S. Services Activity Undershoot Estimates

Forex Jan 07, 2019 01:51PM ET
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Investing.com - The dollar fell against its rivals for third-straight session Monday as U.S. services activity undershot expectations, strengthening expectations the Federal Reserve could rein in rate hikes.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.55% to 95.23.

ISM non-manufacturing data for December fell to a reading of 57.6, missing expectations of 59.6.

The services sector is a critical component of the U.S. economy, accounting for roughly 80% of U.S. private-sector gross domestic product (GDP).

Some on Wall Street, however, were quick to downplay the soft services data, insisting U.S. economic growth remained intact.

The composition of the report was mixed, as the business activity and employment components declined, but the new orders component actually edged up, Goldman Sachs (NYSE:GS) said.

"The report remains consistent with a solid pace of activity and employment growth in the service sector," the bank added.

Remarks from Atlanta Federal Reserve President Raphael Bostic, meanwhile, did little to alter the expectations for a less hawkish Fed.

"I am at one move for 2019," said Bostic, who is not a voter on Fed policy this year.

The Federal Reserve in December hinted that two rate hikes were on the table this year, but Fed Chairman Powell indicated last week the central bank would be willing to rein in monetary policy tightening should the need arise.

The euro and sterling also forced the dollar deeper into the red, as the latter pair tacked on gains a day of ahead of a debate in the U.K's parliament on Prime Minister Theresa May’s Brexit withdrawal agreement.

A vote on May's Brexit deal is slated for Jan. 15.

GBP/USD rose 0.35% to $1.2771 and EUR/USD rose 0.71% to $1.1474.

USD/CAD fell 0.62% to C$1.3286 as the loonie was underpinned by rising oil prices on the back of a cocktail of stimulating factors, including U.S.-Sino trade talks and data pointing to lower Cushing stockpiles.

USD/JPY rose 0.02% to Y108.54 from session lows of Y108.03 as risk-on sentiment dented demand for safe-haven yen.

-- Reuters contributed to this report.

Forex - Dollar in Doldrums as U.S. Services Activity Undershoot Estimates
 

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