Dollar falls on data, waning Ukraine fears
Frankfurt (Mar 25) The dollar moved lower against most major currencies after a U.S. manufacturing gauge missed expectations, while hopes for the Russian standoff in Ukraine to unfold without military engagement sparked demand for the euro, which came at the greenback's expense.
In U.S. trading on Monday, EUR/USD was up 0.34% at 1.3841.
Ukraine withdrew its forces from Crimea on Monday, and while tensions remained high, expectations for the impasse not to escalate into outright military action sparked demand for the euro and sent the dollar sliding, as did soft manufacturing data.
Markit Economics reported earlier that its preliminary U.S. manufacturing purchasing managers’ index fell to a seasonally adjusted 55.5 in March from a final reading of 57.1 in February. Analysts were expecting the index to dip to 56.5 in March.
On the index, a reading above 50.0 indicates industry expansion, below indicates contraction, which gave the dollar some support.
Elsewhere investors digested hit-or-miss manufacturing gauges and went long on the euro on sentiments that even though the numbers missed expectations in Germany, positive readings elsewhere showed that recovery continues in Europe.
Markit Economics reported earlier that its preliminary reading of the euro area’s composite purchasing managers' index ticked down to 53.2, only slightly lower than February’s 32-month highs of 53.3.
However, the euro came under pressure after data showed that the preliminary reading of Germany’s manufacturing purchasing managers' index fell to a four-month low of 53.8 in march from a final reading of 54.8 in February, missing forecasts for a 54.6 reading.
The country’s services PMI declined to 54.0, from 55.9 last month, missing consensus forecasts for a 55.5 reading.
Better-than-expected data out of France cushioned the euro's losses
The French manufacturing PMI rose to 51.9 in March, from 49.7 last month, beating expectations for a 49.8 reading. France’s services PMI rose to a 26-month high of 51.4 from 47.2 in February, well above forecasts for a 47.5 reading.
Markets interpreted the French numbers as a sign that recovery in the euro area is gaining steam.
The greenback was down against the pound, with GBP/USD up 0.08% at 1.6500.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.28% at 80.06.
On Tuesday, the U.S. is to release report on house price inflation and consumer confidence, as well as official data on new home sales.