(Updates with official correction to ISM Manufacturing data,
* Investors see easing steps at Thursday's ECB meeting
* Currency speculators increase short bets on euro -IMM
By Daniel Bases
NEW YORK, June 2 The U.S. dollar rose on Monday,
aided by subdued German inflation figures and
slower-than-expected manufacturing growth in the euro zone, both
of which piled pressure on the European Central Bank to ease
monetary policy aggressively this week.
The U.S. dollar index rose 0.36 percent on Monday against a
basket of currencies from its main trading partners. The
index is hovering at a two-month high.
Attention remains squarely on the ECB's policy meeting on
Thursday and the U.S. payrolls report for May on Friday.
"The euro has been trading on the softer side in general as
we go into the ECB meeting as there is some level of caution
here," said Alan Ruskin, global head of G19 currency strategy at
Deutsche Bank in New York.
Currency speculators increased short euro positions to
16,633 contracts from 9,220 last week, according to data for the
week ended May 27 released by the Commodity Futures Trading
Commission on Friday.
The ECB is preparing policy options for its June 5 meeting
that include cuts in all its interest rates, Reuters reported
The euro was at $1.3599, down 0.23 percent in New
Germany's annual inflation rate rose 0.6 percent, less than
the 1.0 percent expected in a Reuters poll and the lowest
reading since February 2010. Euro zone inflation data is due out
"Soft inflation now reinforces the point of view that the
ECB will remain dovish and remain ready to ease policy in the
future. That's negative for the euro," said Vassili Serebriakov,
currency strategist at BNP Paribas in New York.
The euro also fell 0.18 percent against sterling
to 81.22 pence, with diverging monetary policy outlooks for the
ECB and the Bank of England underpinning the pound.
In the United States, the Institute for Supply Management's
May data showed manufacturing activity expanded with a reading
of 55.4 versus 54.9 in April, just below the Reuters estimate of
55.5. A reading above 50 indicates expansion.
ISM initially released incorrect data showing a slowdown in
activity. The original report, for which ISM blamed a computer
glitch, was so far off from economists' forecasts that it
immediately became suspect.
The original report led to a fall in U.S. Treasury yields as
it supported loose U.S. monetary policy. The dollar followed
suit, but only temporarily, as questions in the market fueled
doubt over the report's accuracy. Treasury yields have since
Earlier, the final reading of the manufacturing Purchasing
Managers' Index for the euro zone disappointed, slipping to a
The dollar held its advantage on the yen, trading at 102.36
yen, a rise of 0.57 percent. The euro rose 0.35 percent
to 139.22 yen.
(Additional reporting by Anirban Nag in London and; Lisa
Twaronite in Tokyo; Editing by Louise Ireland, James Dalgleish,
Peter Galloway and Nick Zieminski)