Investing.com - The dollar pared gains against a basket of other major currencies on Monday, after the release of downbeat U.S. economic reports, although hopes the Federal Reserve will soon raise interest rates still lent some support.
The Federal Reserve said that industrial production declined by 0.2% last month, disappointing expectations for a gain of 0.3%. Industrial production fell by 0.5% in April, whose figure was revised down from a previously reported drop of 0.3%.
The report came after the Federal Reserve Bank of New York said that its general business conditions index fell to -2.0 this month from a reading of 3.1 in May. Analysts had expected the index to rise to 6.0 in June.
Market participants were looking ahead to the outcome of the Fed’s latest policy meeting on Wednesday for a clear signal on when it could start to raise interest rates.
Upbeat data on U.S. consumer sentiment on Friday underlined expectations that the central bank could start to hike rates at its September meeting.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.13% at 95.36, after rising to highs of 95.66 earlier in the day.
EUR/USD was down 0.13% to 1.1247.
The euro remained under pressure after talks in Brussels between Greece and European Union representatives failed to reach an agreement on pension reforms, budget targets and tax rates, adding to fears over a debt default that would threaten Greece’s future in the euro zone.
Investors were looking ahead to a meeting of euro zone finance ministers on Thursday, which was being seen as Greece's last chance to strike a deal.
The pound was also lower, with GBP/USD slipping 0.10% to 1.5541 after ratings agency Standard & Poor’s downgraded its outlook on the U.K.'s sovereign rating to negative on Friday, citing concerns over the government’s decision to hold a referendum on EU membership by 2017.
There is at least a one-in-three probability that the U.K. will lose its AAA rating within the next two years, S&P warned.
Elsewhere, the dollar was steady against the yen, with USD/JPY at 123.44 and higher against the Swiss franc, with USD/CHF gaining 0.80% to 0.9358.
The Australian and New Zealand dollars turned higher, with AUD/USD up 0.58% to 0.7775 and with NZD/USD edging up 0.14% to 0.6996, off nearly five-year lows of 0.6960 hit earlier in the day.
Meanwhile, USD/CAD added 0.12% to trade at 1.2324 after data on Monday showed that Canada's manufacturing sales dropped 2.1% in April, compared to expectations for a 0.5% slip.
The change in manufacturing sales in March was revised to a 2.7% increase from a previously estimated 2.9% rise.