Dollar Loses Ground On Weak Economic Data

(RTTNews) - The U.S. dollar weakened against its major counterparts on Monday, weighed down by data showing a bigger than expected contraction in the nation's manufacturing activity in the month of May.

A report from the Institute for Supply Management said manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of May, edging down to 48.7 in the month, from 49.2 in April. Economists had expected the index to inch up to 49.6.

The report also said the prices index slid to 57.0 in May from 60.9 in April, suggesting a slowdown in the pace of price growth.

On Wednesday, the ISM is scheduled to release a separate report on service sector activity in the month of May. The services PMI is expected to rise to 50.5 in May from 49.4 in April, with a reading above 50 indicating growth. Preliminary data from the U.S. Census Bureau showed US construction spending shrunk unexpectedly in April amid declines in both private and public construction.

The report said construction spending dipped 0.1% to $2,099.0 billion from the revised estimate of $2,101.5 billion in March. Spending was expected to grow 0.2 percent after a 0.2 percent decrease in March. The unexpected decrease by the headline index partly reflected a faster contraction in new orders, as the new orders index fell to 45.4 in May from 49.1 in April.

The production index also slipped to 50.2 in May from 51.3 in April, although a reading above 50 still indicates growth.

Meanwhile, the ISM said the employment index rose to 51.1 in May from 48.6 in April, indicating a rebound by employment during the month.

The dollar index slipped to 104.08, losing nearly 0.6%.

Against the euro, the dollar weakened to 1.0904 from 1.0848. Against Pound Sterling, the dollar eased to 1.2806 from 1.2740.

The dollar weakened to 156.07 yen from 157.27. Against the Aussie, the dollar dropped to 0.6689. The dollar was down against Swiss franc at CHF 0.8958, weakening from CHF 0.9025. The loonie was up slightly at 1.3628 a unit of the U.S. currency.