Dollar index pushes lower as U.S. factory orders disappoint

Investing.com –

Investing.com – The dollar pushed lower against the other major currencies on Tuesday, after disappointing U.S. factory orders data added to Monday’s weak U.S. economic reports, dampening optimism over the strength of the country’s recovery.

In a report, the U.S. Census Bureau said factory orders declined by 3.4% in December, worse than expectations for a decline of 2.2%. Factory orders fell by 1.7% in November, whose figure was revised from a previously reported decline of 0.7%.

Sentiment on the dollar remained vulnerable after data on Monday showed that U.S. consumer spending fell at the fastest rate since September 2009 in December, dropping 0.3% as households saved on cheaper gasoline prices.

Separate reports showed that U.S. construction spending rose less than expected in December, while manufacturing growth slowed.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.67% to 94.18.

EUR/USD climbed 0.79% to 1.1433. The euro found some support after the Greek government outlined its plans to renegotiate the terms of its bailout with its creditors, retreating from demands for a debt writedown.

Greek Finance Minister Yanis Varoufakis has outlined a “menu of debt swaps” to ease the burden of the country’s debt, under which creditors would swap outstanding debt for new growth-linked bonds.

The pound was also higher against the dollar, with GBP/USD rising 0.26% to 1.5082 after Markit and the Chartered Institute of Purchasing & Supply said that their U.K. construction purchasing managers’ index increased to 59.1 last month from a reading of 57.6 in December.

Economists had expected the index to dip to 57.0 in January.

Elsewhere, USD/CHF dropped 0.41% to trade at 0.9241 and EUR/CHF gained 0.44% to 1.0567.

The Swiss franc had weakened broadly on Monday amid 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 edged up 0.12% to 117.68.

The Australian and New Zealand dollars remaied lower, with AUD/USD tumbling 1.45% to 0.7690 and NZD/USD slid 0.57% to 0.7263. Earlier Tuesday, the Reserve Bank of Australia surprised markets by unexpectedly lowering its benchmark interest rate to a new record-low 2.25% from 2.50%, citing an overvalued local currency.

In addition, the Australian Bureau of Statistics said that the country’s trade deficit narrowed to A$ 0.44 billion in December from A$ 1.02 billion in November, while building approvals dropped 3.3% in December, compared to expectations for a 5.0% decline.

The Canadian dollar edged higher, with USD/CAD shedding 0.34% to 1.2524.

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