RTTN: Dollar Weakening On Weaker Than Expected Manufacturing Data
The dollar is losing ground against all of its major competitors at the start of the new trading week. The driving force behind the decline is the weaker than expected ISM manufacturing data released this morning.
Activity in the U.S. manufacturing sector expanded at a much slower than expected rate in the month of March, according to a report released by the Institute for Supply Management on Monday. The ISM said its purchasing managers' index fell to 51.3 in March from 54.2 in February, although a reading above 50 indicates continued growth in the manufacturing sector.
While the index pointed to the fourth consecutive month of growth in the manufacturing sector, economists had expected a much more modest decrease to a reading of 54.0.
After reporting a notable drop in U.S. construction spending in the previous month, the Commerce Department released a report on Monday showing that construction spending rebounded by slightly more than expected in February.
The report said construction spending rose 1.2 percent to a seasonally adjusted annual rate of $885.1 billion in February from the revised January estimate of $874.8 billion. Economists had expected spending to increase by about 1.1 percent.
Equity markets in Europe are closed today, due to the Easter holiday. The dollar began Monday's session around the $1.2770 level against the Euro, but has since fallen to a 3-session low of $1.2854.
Greek manufacturing sector contracted for the forty-third consecutive month in March, data from a survey by Markit Economics showed Monday. The seasonally adjusted purchasing managers' index for the manufacturing sector dropped to 42.1 in March from 43 in February.
The greenback has also slipped below a trading range around the $1.5200 level against the pound sterling on Monday, to a 1-week low of $1.5240.
The buck has dropped below a 2-day range around the Y94.200 level against the Japanese Yen on Monday, to over a 3-week low of Y93.213.
Confidence among Japanese businesses improved in the March quarter as weaker yen boosted expectations of an economic recovery, the quarterly Tankan survey showed Monday. The survey is closely watched by the Bank of Japan for formulating policies.
The sentiment index for large manufacturers rose to -8 in the March survey, up from -12 in the December survey. This was, however, marginally weaker than the expected score of -7.
