Dollar index slides lower on downbeat ISM report

Investing.com –

Investing.com – The dollar slid lower against the other major currencies on Monday, after data showed that manufacturing activity in the U.S. expanded at the slowest rate in 11 months in January.

In a report, the Institute for Supply Management said its index of purchasing managers fell to 53.5 last month from a reading of 55.5 in December. Analysts had expected the manufacturing PMI to decline to 54.5 in January.

The data came after the Commerce Department said that personal spending fell 0.3% in December, worse than expectations for a decline of 0.2%. Personal spending rose 0.5% in November, whose figure was revised down from a previously reported gain of 0.6%.

The report also showed personal income rose 0.3% in December, above forecasts for 0.2% and after gaining 0.3% in November.

Sentiment on the greenback became vulnerable on Friday after the Commerce Department said in a report that the U.S. economy expanded 2.6% in the final three months of 2014, below expectations for a 3.0% gain and slowing sharply from growth of 5.0% in the three months to September.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.44% to 94.63.

EUR/USD climbed 0.63% to 1.1358.

The euro remained supported by hopes that Greece’s new government would be able to reach a compromise with its international creditors on the terms of its bailout.

Also Monday, data showed that the final euro zone manufacturing PMI rose to 51.0 in January from 50.6 in December. Activity France, Italy and Greece declined, while activity in Germany slowed from the previous month, underlining concerns over the weak recovery.

The pound was steady, with GBP/USD at 1.5066. Markit earlier reported that its U.K. manufacturing PMI rose to 53.0 last month from a reading of 52.5 in December. Analysts had expected the index to inch up to 52.6 in January.

Elsewhere, USD/CHF advanced 0.71% to trade at 0.9265 and EUR/CHF rallied 1.30% to 1.0521 following reports the Swiss National Bank was unofficially targeting an exchange rate of 1.05 to 1.10 francs per euro. The central bank declined to comment on the report.

Figures from the SNB on Monday showed that sight deposits jumped to 383.32 billion francs last week after an 8% increase in the previous week to 365.48 billion francs. The data indicated that the bank has been purchasing foreign currency in the market.

Meanwhile, USD/JPY slipped 0.24% to 117.21.

The Australian and New Zealand dollars were higher, with AUD/USD climbing 0.75% to 0.7824 and NZD/USD gaining 0.92% to 0.7323.

The Canadian dollar pulled further away from last week’s six-year lows, with USD/CAD tumbling 1.29% to 1.2570.

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