The dollar started the week in positive territory against the other major currencies, after a calamitous day of data releases. While the euro continues to weaken ahead of this weeks European Central Bank monthly policy meeting.
The dollar initially weakened against the euro after the Institute of Supply Management said this morning that its manufacturing purchasing managers’ index ticked down to 53.2 in May. But this was later corrected to a rise to 56.00 up from April’s 54.9. And it didn’t end there, it seems they put an intern in charge of the calculator. The data was amended yet again later in the session to a final PMI figure of 55.4.
Following the update, the dollar reversed losses against the other major currencies, strengthening against the euro, yen, pound and Australian dollar.
In Europe, the single currency remains under pressure after Fridays data showed that the annual rate of inflation in Italy and Spain slowed in May added to expectations that the ECB will take steps to tackle low consumer price growth, which is threatening the fragile recovery in the single currency bloc.
Earlier Monday, official data showed that German consumer price inflation accelerated at an annualized rate of 0.9% last month, down from 1.3% in April. Analysts had expected German consumer prices to rise by 1.1% in May.
In a separate report, Markit research group said that Spain’s manufacturing PMI rose to 52.9 this month, from 52.7 in May, while Italy’s manufacturing PMI slipped to 53.2 in June, from a reading of 54.0.
EUR/USD closed the session down -0.29% at 1.3595.
While the pound held steady against the dollar, following the release of U.K. manufacturing PMI, which ticked down to 57.0 in June, from a reading of 57.3 the previous month, in line with expectations.
A separate report showed that net lending to individuals in the U.K. rose by £2.4 billion in April, below expectations for a £2.7 billion increase, after a downwardly revised £2.8 billion gain in March.
GBP/USD closed the session down -0.04% at 1.6746.
Elsewhere, the dollar was higher against the Japanese yen which sank after the release of upbeat China manufacturing data which boosted investor sentiment.
USD/JPY closed the session up 0.68% at 102.46.
However this mornings upbeat Chinese data did little to support the Australian dollar, which weakened after official data showed that building approvals in Australia dropped 5.6% in April, confounding expectations for a 1.8% increase, after 4.8% fall in March, whose figure was revised from a previously estimated 3.5% slip.
AUD/USD closed the session down -0.71% to 0.9244.
The New Zealand dollar was also softer with New Zealand markets closed due to a public holiday.
NZD/USD closed the session down -0.61% at 0.8448.
Finally the Canadian dollar was weaker, ahead of an event-heavy week as investors moved to the U.S. dollar ahead of key U.S. economic data.
USD/CAD closed the session up 0.52% at 1.0901.
More coverage of today’s session.
- FT: ECB rate decision provides focus in busy week for data releases. – The eurozone, the US, the UK and China will all provide interest in what is a busy week for markets. Thursday’s European Central Bank rate announcement will be the most important event of the week. In last month’s ECB press conference Mario Draghi, governor of the central bank, said that he was waiting to see the forecasts that come out this month.
- WSJ: ISM corrects its May factory data. – U.S. manufacturers say business activity expanded in May, but at a slower pace than economists had expected, according to data released Monday by the Institute for Supply Management. Manufacturers reported rising price pressures.
More Top Stories:
Dean Popplewell: Will forex volatility pick up this week? – If this week does not do it for capital markets then very little will. It’s a heavy central bank week schedule, packed tightly with manufacturing, services and composite PMIs, that will give investors an update on business activity.
Marc Chandler: Dollar is bid to start new week and month. – The U.S. dollar is firmer against the major and most emerging market currencies. Poor data from Australia, in the form of an unexpected drop in building approvals, and disappointing European manufacturing PMI readings and softer German states’ inflation took a toll ahead of this week’s events.
SMH: Australian dollar flat despite strong China PMI. – The Australian dollar is holding flat on Monday morning, despite a better-than-expected reading of factory activity in China.
Globe and Mail: Speculators betting against Canadian dollar refuse to ‘capitulate’. – Speculators betting against the Canadian dollar refuse to cry uncle. According to the latest numbers from the U.S. Commodities Futures Trading Commission, short positions against the Canadian currency are well down from the swollen levels of several months ago, but remain high at about $2-billion.
WSJ: Canadian dollar moves lower on broad U.S. dollar strength. – The Canadian dollar was weaker early Monday, with the loonie beginning an event-heavy week on the back foot as investors moved to the U.S. dollar ahead of key U.S. economic data.
MarketWatch: Gold futures slip back after recent ‘death cross’. – Gold futures slipped back on Monday, with analysts calling for further declines in the wake of the recent “death cross” in the moving-average prices for the yellow metal, as traders digested the latest batch of global economic data.
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