Investing.com - The dollar gained against most major currencies on Monday after U.S. manufacturing data beat expectations, while dovish comments out of the Bank of Japan weakened the yen and bolstered demand for the U.S. currency.
In U.S. trading on Monday, EUR/USD was down 0.38% at 1.3540.
The dollar saw support earlier after the Institute for Supply Management reported that U.S. manufacturing activity in November expanded at its fastest pace since April 2011, fueling expectations for the Federal Reserve to begin scaling back stimulus measures in early 2014.
Stimulus measures such as the Fed's USD85 billion in monthly bond purchases weaken the dollar by driving down borrowing costs to spur recovery, and talk of their dismantling — the product of advancing economic data — tends to firm the dollar's value.
The ISM manufacturing purchasing managers’ index rose to 57.3 in November from 56.4 in October.
Analysts were expecting the index to fall to 55.0.
The report said both production and new orders rose by around 3 points to 62.8 and 63.6, respectively, while the employment component of the index indicated some improvement in the labor market in November, rising by a little over 3 points to 56.5.
Meanwhile across the Atlantic, a similar indicator beat expectations as well.
London-based Markit Economics reported that the euro zone's manufacturing PMI rose to a two-year high of 51.6 in November from October's 51.5 reading, beating estimates for an unchanged figure.
Germany's PMI came in at 52.7 compared to market expectations for an unchanged reading of 52.5.
However, Spain’s manufacturing sector contracted for the first time since July last month, while the French manufacturing sector contracted for the 21st straight month, which sent investors favoring the greenback over the single currency.
The greenback was up against the pound, with GBP/USD down 0.11% at 1.6354.
Markit Economics reported earlier that U.K. manufacturing activity expanded at the fastest rate in 33 months in November, which gave the pound some support against the dollar.
The U.K. manufacturing PMI rose to 58.4, the highest level since February 2011, from an upwardly revised 56.5 in October. Analysts were expecting a decline to 56.0.
The dollar was up against the yen, with USD/JPY up 0.61% at 103.08, and up against the Swiss franc, with USD/CHF up 0.25% at 0.9085.
The yen came under pressure on market expectations for the Bank of Japan to beef up stimulus programs to meet its 2% inflation target by 2015.
Earlier Monday, BoJ Governor Haruhiko Kuroda pledged to counter any new downside risks to the bank’s inflation goal, saying the BoJ would act by "adjusting monetary policy without hesitation."
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.16% at 1.0632, AUD/USD down 0.10% at 0.9101 and NZD/USD trading up 0.55% at 0.8179.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.33% at 80.94.
In U.S. trading on Monday, EUR/USD was down 0.38% at 1.3540.
The dollar saw support earlier after the Institute for Supply Management reported that U.S. manufacturing activity in November expanded at its fastest pace since April 2011, fueling expectations for the Federal Reserve to begin scaling back stimulus measures in early 2014.
Stimulus measures such as the Fed's USD85 billion in monthly bond purchases weaken the dollar by driving down borrowing costs to spur recovery, and talk of their dismantling — the product of advancing economic data — tends to firm the dollar's value.
The ISM manufacturing purchasing managers’ index rose to 57.3 in November from 56.4 in October.
Analysts were expecting the index to fall to 55.0.
The report said both production and new orders rose by around 3 points to 62.8 and 63.6, respectively, while the employment component of the index indicated some improvement in the labor market in November, rising by a little over 3 points to 56.5.
Meanwhile across the Atlantic, a similar indicator beat expectations as well.
London-based Markit Economics reported that the euro zone's manufacturing PMI rose to a two-year high of 51.6 in November from October's 51.5 reading, beating estimates for an unchanged figure.
Germany's PMI came in at 52.7 compared to market expectations for an unchanged reading of 52.5.
However, Spain’s manufacturing sector contracted for the first time since July last month, while the French manufacturing sector contracted for the 21st straight month, which sent investors favoring the greenback over the single currency.
The greenback was up against the pound, with GBP/USD down 0.11% at 1.6354.
Markit Economics reported earlier that U.K. manufacturing activity expanded at the fastest rate in 33 months in November, which gave the pound some support against the dollar.
The U.K. manufacturing PMI rose to 58.4, the highest level since February 2011, from an upwardly revised 56.5 in October. Analysts were expecting a decline to 56.0.
The dollar was up against the yen, with USD/JPY up 0.61% at 103.08, and up against the Swiss franc, with USD/CHF up 0.25% at 0.9085.
The yen came under pressure on market expectations for the Bank of Japan to beef up stimulus programs to meet its 2% inflation target by 2015.
Earlier Monday, BoJ Governor Haruhiko Kuroda pledged to counter any new downside risks to the bank’s inflation goal, saying the BoJ would act by "adjusting monetary policy without hesitation."
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.16% at 1.0632, AUD/USD down 0.10% at 0.9101 and NZD/USD trading up 0.55% at 0.8179.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.33% at 80.94.