Investing.com - The dollar remained broadly lower against the other major currencies on Tuesday, after the release of disappointing U.S. manufacturing data and as expectations that the Federal Reserve will leave interest rates on hold for longer continued to weigh.
EUR/USD dipped 0.04% to 1.3687.
The Institute for Supply Management said its index of purchasing managers fell to 55.3 last month from a reading of 55.4 in May. Analysts had expected the manufacturing PMI to increase to 55.8 in June.
The report came after U.S. data last week showing a 2.9% economic contraction in the first quarter bolstered expectations that the Fed will keep rates on hold for an extended period.
Speaking Monday, San Francisco Fed President John Williams underlined this view, saying the bank will probably need to hold interest rates near zero for at least another year, despite signs that the economy is improving.
Meanwhile, the single currency remained supported despite data indicating that the manufacturing recovery in the euro area is losing momentum.
Revised data released on Tuesday showed that the euro zone’s manufacturing PMI dipped to a seven-month low of 51.8 in June from 52.2 in May. Growth in the German factory sector slowed to an eight month low of 52.0, while the French manufacturing PMI fell to a six-month low of 48.2.
A separate report showed that the region’s unemployment rate ticked down to 11.6% in May, revised from the initial reading of 11.7%.
GBP/USD added 0.26% to trade at 1.7150, the highest since October 2008. The pound gained ground after a report showed that the U.K. manufacturing PMI rose to 57.5 last month, up from 57.0 in May.
The data indicated that the U.K. economy continued to grow at a strong pace in the second quarter, fuelling expectations that the deepening recovery will prompt the Bank of England to raise interest rates before then end of 2014.
Elsewhere, the dollar edged higher against the yen, with USD/JPY adding 0.17% to 101.50. Meanwhile, USD/CHF was unchanged at 0.8866.
The Australian dollar rose to seven month highs, with AUD/USD up 0.56% to 0.9485, while NZD/USD rose 0.32% to 0.8786 and USD/CAD slipped 0.15% to 1.0655.
The Australian dollar strengthened after the Reserve Bank sounded less dovish than expected after its left rates on hold at 2.5% earlier Tuesday.
The Aussie received an additional boost from upbeat Chinese factory data. China''s official manufacturing PMI rose to 51 in June from 50.8 in May, while the revised reading of the HSBC manufacturing index confirmed that the sector expanded for the first time in six months in June.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was almost unchanged near the previous session’s two-month lows at 79.83.
Please LIKE our Facebook page - it makes us stronger: