FOREX-Dollar falls broadly after weak U.S. manufacturing data

Mon Mar 24, 2014 4:34pm EDT

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 (Updates prices, adds analyst comments, recasts throughout)
    By Sam Forgione
    NEW YORK, March 24 (Reuters) - The dollar fell broadly
against major currencies on Monday after weak U.S. manufacturing
data disrupted expectations that a stronger run of U.S. economic
data would reinforce the Federal Reserve's plans to tighten its
monetary stimulus. 
    Investors took profits in the U.S. currency after financial
data firm Markit said its "flash" or preliminary U.S.
manufacturing sector Purchasing Managers Index slipped to 55.5
in March from 57.1 in February. The results fell short of
economists' expectations. 
    "Many had hoped that this was the start of clean data
reports, so it takes a little bit of wind out of the sails for
the dollar," said Mark McCormick, currency strategist at Credit
Agricole in New York. 
    Analysts said traders had a delayed reaction to the data.
The data had little effect on the dollar immediately following
its release Monday morning.
    Investors snapped up the dollar last week as they bet on a
U.S. interest rate hike early in 2015, after Fed Chair Janet
Yellen surprised markets by raising the prospect of such a move.
    The U.S. dollar index, which measures the dollar
against six major currencies, hit a three-week high of 80.354
last Thursday, a day after Yellen's comments. 
    "Weak data gave investors a reason to take profits," said
McCormick. 
    The euro rose against the dollar, and was last up 0.33
percent at $1.3839. The euro had fallen earlier in the session
after data showed the German private sector slowed in March,
disappointing investors who were positioned for a better reading
on the euro zone's largest economy. 
    Traders said the weak U.S. economic data offset concerns
that the weak German economic data could spur the European
Central Bank to implement more monetary easing, which would be
negative for the euro. 
    The dollar index was last down 0.24 percent at 79.91. The
euro was last up 0.35 percent against the dollar to trade
at $1.3840. The dollar was last down 0.1 percent against the
Japanese yen to trade at 102.17. The dollar was also down
0.26 percent against the Swiss franc at 0.8804 francs.
    Declines in U.S. stocks on Monday helped draw demand for the
yen as a safe-haven currency, said Greg Michalowski, chief
currency analyst at FXDD in New York. The Standard & Poor's 500
 stock index was last down 0.49 percent. 
    The Russian ruble also rose against the dollar, despite U.S.
President Barack Obama's push to pressure Russia over its
seizure of Crimea after Ukraine told its remaining troops to
leave the region for their own safety. 
    "The currency markets have looked past the Russia and
Ukraine story," said McCormick of Credit Agricole. The dollar
was last trading down about 0.42 percent against the ruble at
36.0825 rubles. 
    A recovery in the Chinese yuan helped the Australian dollar
move up from lows. The Aussie, which is used as a more liquid
proxy by investors and speculators to back their views on China,
had dipped after a survey showed activity in Chinese factories
contracted again in March. 
    China's flash Markit/HSBC Purchasing Managers' Index fell to
an eight-month low of 48.1 in March from February's final
reading of 48.5. 
    The Aussie dropped to $0.9048 on the March number,
but it kept clear of last week's low of $0.8990 and later
drifted back to $0.9129, 0.47 percent higher on the day.

 (Additional reporting by Anirban Nag in London; Editing by Nick
Zieminski and Chizu Nomiyama)
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