Investing.com | Aug 31, 2015 16:01
Investing.com - The dollar pared losses against against the other major currencies on Monday, even after data showed that anufacturing activity in the Chicago-area expanded at a slower pace than expected in August, as expectations for an upcoming U.S. rate hike continued to support.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 95.98, off lows of 95.64 hit earlier in the day.
Market research group Kingsbury International said its Chicago purchasing managers’ index declined by 0.3 points to 54.4 this month from a reading of 54.7 in July. Analysts had expected the index to hold steady at 54.7 in August.
The dollar remained supported after Federal Reserve Vice Chairman Stanley Fischer said Friday it was still too early to decide whether to raise interest rates from near zero at the bank’s September meeting.
EUR/USD was up 0.21% to trade at 1.1211.
The single currency found support after data on Monday showed that euro zone consumer price inflation rose by 0.2% last month, above expectations for a gain of 0.1% and following a 0.2% increase in July.
The rate has now been below 1% for 21 straight months, well under the European Central Bank's target of near but just under 2%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs increased by 1.0% in August, matching forecasts and unchanged from July.
The dollar was lower against the yen, with USD/JPY down 0.38% to 121.24.
Shanghai Composite turned lower on Monday after a 10% rally in the previous two sessions, amid renewed concerns over the health of the world’s second-largest economy, while shares in Hong Kong were also weaker.
Demand for the yen was boosted as heightened risk aversion underpinned demand for the low-yielding currencies to fund investment in risk assets.
Investors were looking ahead to Friday’s U.S. jobs report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike.
Markets were also awaiting Chinese data on Tuesday which was expected to show that the rate of economic growth is continuing to slow.
Meanwhile, USD/CAD advanced 0.75% to 1.3299 after data on Monday showed that Canada's current account deficit narrowed to C$17.4 billion in the second quarter from a revised deficit of C$18.2 billion in the first quarter.
Analysts had expected the current account deficit to narrow to C$16.9 billion in the last quarter.
Written By: Investing.com
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