Investing.com - The dollar edged slightly higher against the other major currencies on Monday, even after data showed that U.S. manufacturing activity contracted at the fastest pace since July 2009 in December.
USD/JPY was down 0.85% at 119.20.
The Institute for Supply Management said its index of purchasing managers fell to 48.2 last month from a reading of 48.6 in November. Analysts had expected the manufacturing PMI to inch up to 49.0 in December.
Sentiment for the safe-haven yen remained supported after data earlier showed that China’s Caixin manufacturing PMI fell to 48.2 this month from 48.6 in December, confounding expectations for a rise to 48.9.
It was the lowest reading since September and was well below the 50-point level which separates expansion from contraction.
Markets were also jittery amid concerns over growing tensions in the Middle East after Saudi Arabia cut diplomatic ties with Iran over the weekend.
The move followed a weekend storming of the Saudi embassy in Tehran in response to the kingdom's execution of a prominent Shiite cleric.
EUR/USD slid 0.31% to 1.0822, after hitting highs of 1.0946 earlier in the session.
Elsewhere, the dollar moved higher against the pound and the Swiss franc, with GBP/USD slipping 0.19% to 1.4710 and with USD/CHF adding 0.15% to 1.0041.
Markets shrugged off data showing that the Markit manufacturing PMI fell to a three-month low of 51.9 from 52.5 in November, compared to forecasts for an uptick to 52.7.
The Australian and New Zealand dollars were weaker, with AUD/USD down 1.52% to 0.7177 and with NZD/USD losing 1.22% to 0.6747.
Meanwhile, USD/CAD rose 0.39% to trade at 1.3891.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.17% at 98.95, off lows of 98.12 hit earlier in the day.