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Dollar mixed vs. rivals amid global easing hopes

Published 07/03/2012, 04:41 AM
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Investing.com - The U.S. dollar was mixed against its major counterparts on Tuesday, as a string of downbeat economic reports added to concerns over the perspective for global economic growth and raised expectations for further monetary easing by central banks.

During European morning trade, the dollar was lower against the euro, with EUR/USD adding 0.11% to hit 1.2589.

On Monday, the Institute for Supply Management said its index of U.S. manufacturing activity dropped to 49.7 in June, its lowest level since July 2009, from 53.5 in May.

The data fuelled speculation that the Federal Reserve may implement a third round of quantitative easing to shore up growth in the U.S. economy, which has been hit by the ongoing crisis in the euro zone.

In the euro zone, the final reading of the bloc’s manufacturing index came in at 45.1 in June, holding steady at its lowest level since June 2009.

Investors were looking ahead to the outcome of the European Central Bank’s monetary policy meeting on Thursday, amid growing expectations for a rate cut.

The greenback was steady against the pound, with GBP/USD edging down 0.05% to hit 1.5684.

Data showed that construction sector activity in the U.K. contracted in June, for the first time since February 2009.

The construction purchasing managers’ index fell to 48.2 in June from a reading of 54.4 the previous month. Analysts had expected the index to decline to 53.0 in June.

Separately, the Bank of England said that net lending to individuals declined less-than-expected in May, falling to GBP1.3 billion from GBP1.4 billion the previous month.

Elsewhere, the greenback was higher against the yen and lower against the Swiss franc, with USD/JPY rising 0.38% to hit 79.81 and USD/CHF edging 0.10% lower to hit 0.9542.

Government data showed earlier that average cash earnings in Japan fell unexpectedly in May, declining 0.8% after a 0.2% rise the previous month. Analysts had expected average cash earnings to rise 0.6% in May.

In addition, the greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD falling 0.25% to hit 1.0146, AUD/USD adding 0.11% to hit 1.0260 and NZD/USD dipping 0.02% to hit 0.8034.

Earlier in the day, the Reserve Bank of Australia held its benchmark interest rate at 3.50%, saying the economy continued to grow in the first part of 2012, at a pace somewhat stronger than earlier indicated.

In addition, official data showed that building approvals in Australia jumped by 27.3% in May, blowing past expectations for a 5.1% rise and following a 7.6% drop the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, eased 0.02%, to trade at 81.96.

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


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