Investing.com - The dollar pared gains against the other major currencies on Monday, after data showed U.S. manufacturing activity expanded at a slower rate than expected in July, fuelling speculation that the Federal Reserve could delay raising interest rates.
The Institute for Supply Management reported that its index of purchasing managers fell to 52.7 last month from a reading of 53.5 in June. Analysts had expected the manufacturing PMI to hold steady at 53.5 in July.
The report came shortly after data showed that U.S. personal spending rose 0.2% in June, in line with expectations. Personal spending increased by 0.7% in May, whose figure was revised from a previously estimated gain of 0.9%.
The report also showed that U.S. personal income rose 0.3% in June, exceeding expectations for an uptick of 0.2%. Personal income rose by 0.4% in May, whose figure was revised from a previously estimated increase of 0.5%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 97.39, after hitting highs of 97.69 earlier in the session.
EUR/USD was steady at 1.0980, easing off session lows of 1.0941.
Data on Monday showed that the euro zone's manufacturing sector continued to expand at a steady pace at the start of the third quarter.
Continuing expansion in Germany, Spain and Italy offset a record contraction of the Greek manufacturing sector last month after capital controls were imposed to avert a collapse of the country's financial system.
The dollar was fractionally higher against the yen, with USD/JPY up 0.08% to 123.94, and was lower against the Swiss franc, with USD/CHF down 0.10% at 0.9662.
The dollar received a boost after weak Chinese factory data on Monday added to concerns over a slowdown in the world’s second-largest economy.
The final reading of the Caixin/Markit China manufacturing purchasing managers' index fell to 47.8 in July, the lowest since July 2013, from 49.4 in June. It was the fifth straight month of contraction.
The dollar was little changed against the pound, with GBP/USD at 1.5520, down from highs of 1.5645 hit earlier in the day.
Research group Markit reported on Monday that the U.K. manufacturing PMI ticked up to 51.9 last month from 51.4 in June, which was the lowest level in over two years. Economists had expected a reading of 51.6.
The Australian dollar remained lower, with AUD/USD down 0.40% to 0.7278, while NZD/USD rose 0.24% to 0.6607.
Meanwhile, USD/CAD was up 0.21% to 1.3118, pulling away from an 11-year peak of 1.3176 hit earlier Monday.