Dollar mixed in subdued trade ahead of U.S. holiday

Published 07/03/2012, 08:24 AM
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Investing.com - The U.S. dollar was mixed against its major counterparts on Tuesday, as trade remained subdued ahead of a U.S. holiday on Wednesday and European monetary policy decisions later in the week.

During European afternoon trade, the dollar was little changed against the euro, with EUR/USD dipping 0.01% to hit 1.2574.

Sentiment on the dollar was hit after data on Monday showing that the U.S. manufacturing sector had contracted for the first time since July 2009 in June fuelled speculation that the U.S. central bank could implement a third round of quantitative easing to shore up growth.

The Institute for Supply Management said its index of U.S. manufacturing activity dropped to 49.7 in June, from 53.5 in May.

Investors were eyeing the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut to help bolster growth in the bloc.

Data on Monday showed that the unemployment rate in the region rose to a record in May, while the manufacturing sector remained firmly in contraction territory in June.

The greenback was slightly higher against the pound, with GBP/USD slipping 0.13% to hit 1.5669.

Earlier Tuesday, data showed that construction activity in the U.K. fell at the fastest rate in two-and-a-half years in June, as output and new orders both fell.

The weak data added to speculation that the Bank of England will implement a fresh round of stimulus measures at Thursday’s policy meeting, after data on Monday showed that the U.K. manufacturing sector contracted for a second successive month in June.

Elsewhere, the greenback was up against the yen, with USD/JPY adding 0.30% to trade at 79.74, but remained flat against the Swiss franc, with USD/CHF unchanged on the day at 0.9551.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD sliding 0.09% to 1.0161, AUD/USD inching up 0.06% to 1.0254 and NZD/USD losing 0.19% to hit 0.8020.

The Australian dollar was little changed earlier after the Reserve Bank of Australia left its benchmark interest rate unchanged at 3.50%, in line with expectations.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, eased up 0.10%, to 82.07.

Later in the day, the U.S. was to release official data on factory orders.


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