Investing.com - The dollar slipped against most major currencies on Monday as the euro recovered from soft European output data, while the escalating Iraqi insurgency offset positive U.S. housing data.
In U.S. trading on Monday, EUR/USD was up 0.01% at 1.3602, taking back earlier losses and investors brushed off European factory numbers.
The euro zone’s composite index of service and manufacturing sector activity fell to a six-month low of 52.8 in June from 53.5 in May, missing market calls for an unchanged reading, according to London-based Markit Economics.
The numbers softened the euro, though bargain hunters sent the currency back up.
France’s private sector continued to contract this month, dragging on the euro zone as a whole, while Germany private sector continued to expand.
The French manufacturing PMI tumbled to a six-month low of 47.8, down from 49.6 in May, while the service sector PMI fell to a four-month low of 48.2 from 49.1
Germany’s manufacturing PMI ticked up to a two-month high of 52.4 from 52.3 in May.
The country’s services PMI declined to a two-month low of 54.8 from 56.0 in May, but remained well above the 50 level that separates growth from contraction.
European Central Bank President Mario Draghi said over the weekend that interest rates would stay low over a longer period. He added that large-scale asset purchases are still part of the central bank's toolkit though monetary authorities would need to see inflation expectations deteriorate rolling out fresh quantitative easing programs.
The ECB cut interest rates to record lows and launched a series of measures to boost lending to companies earlier this month, in a bid to stave off the threat of deflation in the euro area and shore up the recovery.
Meanwhile, the dollar rose earlier on upbeat U.S. housing-sector data.
The National Association of Realtors reported earlier that existing home sales hit 4.89 million in May, up 4.9% from April's revised 4.66 million rate and above market calls for 4.73 million units.
Elsewhere, Markit Economic reported that U.S. manufacturing PMI rose to 57.5 in June from 56.4 in May, beating market calls for a 56.1 reading.
Geopolitical concerns softened the greenback, however.
A bloody Sunni insurgency in Iraq fueled safe-haven demand for gold, as fears continued to persist the U.S. will become increasingly involved in the conflict, which could threaten recovery.
Gold often sees safe-harbor demand among investors worried over geopolitical issues, and the yellow metal tends to trade inversely from the greenback.
Iraqi Prime Minister Nuri al-Maliki has agreed to a July 1 deadline to create a new government, a step required by Washington if Baghdad receives U.S. assistance in battling the insurgents.
The dollar was down against the yen, with USD/JPY down 0.18% and trading at 101.90, and down against the Swiss franc, with USD/CHF down 0.08% at 0.8942.
The greenback was down against the pound, with GBP/USD up 0.05% at 1.7023.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.27% at 1.0729, AUD/USD up 0.29% at 0.9417 and NZD/USD up 0.13% at 0.8708.
All three currencies advanced on the release of stronger-than-expected factory data from China.
China’s HSBC manufacturing purchasing managers’ index came in at 50.8 in June, up from a final reading of 49.4 in May. It was the first time the index has risen above the 50 level separating growth from contraction in six months.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.08% at 80.34.
On Tuesday, the U.S. is to release private-sector data on consumer confidence, as well as a report on new home sales.