NEW YORK: The dollar edged up against the euro and the pound on Monday after economic data continued to show the resilience of the US economy compared to its major peers.
A closely watched purchasing managers’ survey showed that US business activity slowed to a five-month low in July, dragged down by decelerating service sector growth, but the data was better than similar surveys out of Europe. Falling US input prices and slower hiring indicated the Federal Reserve could be making progress on important fronts in its bid to reduce inflation.
S&P Global said its flash US Composite PMI index, which tracks manufacturing and service sectors, fell to a reading of 52 in July from 53.2 in June. July’s reading showed the sixth straight month of growth but was restrained by softening conditions in the service sector. Readings above 50 indicate expansion.
“The buck continues to get up off the canvas as the US remains among the most resilient major economies. The US economy’s ability so far to better withstand higher interest rates than some of its chief peers has put a spotlight on economic divergence – a dollar-positive theme,” said Joe Manimbo, a senior market analyst at Convera in Washington D.C. “Meanwhile, the ECB may be closer to the end of its tightening cycle given the bloc’s subpar performance.”
The dollar index rose 0.148% to 101.230, with the euro down 0.35% to $ 1.1084, while sterling was last trading at $ 1.2816, down 0.30%, at the start of a busy week for central bank meetings with investors expecting rate hikes in Europe and the United States.
The euro slid after PMI data showed euro zone business activity shrank much more than expected in July. The pound also dropped after British business activity data, but its move was less dramatic.
The Japanese yen strengthened 0.40% versus the greenback to 141.23 per dollar.
There is plenty more for investors to watch this week - the Federal Reserve concludes a meeting on Wednesday, followed by the European Central Bank (ECB) a day later and the Bank of Japan on Friday, as well as earnings from many heavyweight companies.
Futures expect the Fed’s overnight rate will rise to 5.41% in November and stay above 5% until May 2024.
In cryptocurrencies, bitcoin last fell 2.56% to $29,116.02. Ethereum last fell 2.51% to $1,847.04.
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