Investing.com - The euro pulled away from lows against the dollar on Wednesday after data showed that manufacturing activity in the U.S. slowed in September after expanding at the fastest rate in almost three-and-half years the previous month.
EUR/USD was last at 1.2628, off session lows of 1.2584, which was close to Tuesday’s two-year trough of 1.2570.
The dollar eased after the Institute of Supply Management reported that its manufacturing index fell to 56.6 last month from 59.0 in August. Economists had expected the index to decline to 58.5.
The employment sub-index slowed to 54.6 from 58.1 in the previous month, while the new orders sub-index fell to 60 from 66.7.
At the same time, another report showed that U.S. construction spending fell 0.8% in August to an annual rate of $960.96 billion.
Earlier Wednesday, data showed that the U.S. private sector added slightly more jobs than expected in September.
Payrolls processor ADP reported that the U.S. private sector added 213,000 jobs last month, slightly ahead of expectations for jobs growth of 210,000. The economy created 202,000 jobs in August.
The report came ahead of Friday’s government nonfarm payrolls report, which includes both public and private sector employment. The government report was expected to show that the U.S. economy added more than 200,000 jobs for a sixth successive month in August.
The euro struggled to build on gains after a report earlier showed that the final reading of the currency bloc’s manufacturing index ticked down to a 14-month low of 50.3 in September from 50.5 in August.
The German manufacturing PMI slid to 49.9 from 50.3 previously, falling below the 50 level that separates growth from contraction for the first time in 15 months.
The report came a day after data showed that the annual rate of euro area inflation fell to a five year low of 0.3% in September.
The weak data added to pressure on the European Central Bank to implement additional stimulus measures to stave off the threat of deflation in the region, ahead of its monthly meeting on Thursday.
Meanwhile, the US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 86.04, not far from Tuesday’s peaks of 86.34, a high last seen in June 2010.