Dollar steady to lower vs. rivals in cautious trade

January 6, 2014

Frankfurt (Jan 6)   The dollar was steady to lower against the other major currencies on Monday, as investors remained cautious after mixed euro zone data, while expectations for further reductions in stimulus by the Federal Reserve still lent some support to the greenback.

Dollar steady to lower after mixed E.Z. dataDuring European morning trade, EUR/USD added 0.13% to 1.3606.

Markit research group said the euro zone's final services purchasing managers' index came in at 51.0 in December, unchanged from the preliminary estimate and down slightly from 51.2 in November.

Germany's services PMI fell to 53.5 last month, from a reading of 54.0 in November, compared to expectations for the index to remain unchanged.

In Spain, the services PMI rose to a six-and-a-half year high of 54.2 in December, from a reading of 51.5 the previous month. Analysts had expected the index to remain unchanged last month.

Meanwhile, the dollar remained supported after comments from outgoing Federal Reserve Chairman Ben Bernanke boosted the outlook for the U.S. economy.

On Friday, Bernanke said the U.S. economy should continue to improve in 2014, but added that the recovery remains incomplete.

The pound dropped against the dollar, with GBP/USD down 0.35% to 1.6361 after data showed that activity in the U.K. service sector slowed to a six month low in December.

Markit said the Markit/CIPS Services PMI declined to a six month low of 58.8 in December from 60.0 in November. Analysts had expected an unchanged reading.

Despite the slowdown the index still remained well above the 50.0 level that indicates expansion. The report said confidence rose and the economy still looks likely to have expanded strongly in the fourth quarter.

Elsewhere, the greenback was lower against the yen, with USD/JPY down 0.28% to 104.56 and steady against the Swiss franc, with USD/CHF inching down 0.06% to 0.9046.

The greenback was little changed against the Australian, New Zealand and Canadian dollars, with AUD/USD up 0.03% to 0.8952, NZD/USD easing up 0.01% to 0.8273 and USD/CAD down 0.06% to 1.0629.

The growth-related currencies came under pressure after data over the weekend showed that activity in China’s services sector slumped to the weakest level since August 2011 in December, fuelling concerns over the outlook for growth in the world’s second largest economy.

The U.S. dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.07% to 80.97.

Later in the day, the U.S. was to publish data on factory orders, while the Institute of Supply Management was to release data on service sector activity.

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