Dollar slips versus euro after factory data
NEW YORK (MarketWatch) -- The U.S. dollar slipped against the euro but rose versus the Japanese yen Tuesday after a report showed U.S. factory orders gained more than forecast in May, providing some relief after disappointing data in the previous session.
Currencies remained in tight ranges ahead of meetings of the European Central Bank and Bank of England and the release of U.S. June nonfarm payrolls data later in the week.
The dollar index (DXY) , which tracks the U.S. unit against a basket of six major currencies, traded at 81.796, down from 81.888 in late North American trading Monday.
The euro (EURUSD) rose to $1.2607 from $1.2583.
Against the Japanese currency, the dollar (USDJPY) bought 79.86 yen, up from ¥79.48.
Overall activity was also curtailed amid thin conditions ahead of Wednesday's Independence Day holiday in the U.S., strategists said. The U.S. bond and stock markets closed early Tuesday.
In the only U.S. economic report of the day, the Commerce Department said orders for goods produced in U.S. factories rose 0.7% in May. Economists surveyed by MarketWatch had expected orders to rise by 0.1%. Read more on factory orders.
U.S. stocks and commodities rose after the data, weighing on save-haven currencies including the dollar and yen. On Monday, the closely watched Institute for Supply Management gauge of June U.S. manufacturing activity unexpectedly showed the sector contracted. See more on U.S. stocks.
"The U.S. data [Monday] reminds the market that while most of the focus remains on Europe, the U.S. economy continues to slide, and if this carries on it could clearly counterbalance any of the positive market vibes that came from the recent EU summit," said Steven Barrow, currency strategist at Standard Bank. "This is one reason why we feel that any summit bounce will be short-lived and have not changed our call for euro/dollar to slide to $1.15 this year."
The Australian dollar (AUDUSD) rose to $1.0289 from $1.0253 in late trading on Monday, after the Reserve Bank of Australia left its key lending rate unchanged, as expected.
The country's central bank already cut its cash rate by 75 basis points over its past two meetings to bring the rate down to 3.5%, but analysts expect more cuts in coming months. Read about Australia rate decision.
On Thursday, the European Central Bank is expected to reduce its benchmark rate to an all-time low.
"With inflation readings falling and the real economy slowing in the euro zone, it seems the macro backdrop supports easing by the ECB," said strategists at Brown Brothers Harriman.
"With the Bank of England forecasting a further decline in inflation, the BoE has further scope to pursue further quantitative easing," said strategists at BNP Paribas. The firm expects the BoE to announce another £50 billion ($78.5 billion) of gilt purchases when it meets Thursday.
The British pound (GBPUSD) traded at $1.5699, from $1.5690.