Dollar Remains Weak On Weak Data, Rate Cut Bets

(RTTNews) - The U.S. dollar shed ground on Monday, extending recent decline, amid concerns about slowing economy, and rising bets the Federal Reserve will cut interest rate by more than 25 basis points next month.

Traders also took note of the latest batch of economic data. Service sector activity in the U.S. turned positive in the month of July, according to a report released by the Institute for Supply Management on Monday.

The ISM said its services PMI climbed to 51.4 in July from 48.8 in June, with a reading above 50 indicating growth. Economists had expected the index to rise to 51.0.

The slightly bigger than expected increase by the headline index partly reflected turnarounds by both new orders and business activity.

The new orders index surged to 52.4 in July from 47.3 in June, while the business activity index jumped to 54.5 in July from 49.6 in June.

The Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday that recent weaker than expected job numbers and other data do not suggest that the U.S. economy is in a recession yet and added that the policy need not be restrictive if the economy is not overheating.

"Jobs numbers came in weaker than expected, but not looking yet like recession," Goolsbee said to the broadcaster CNBC.

"I do think you want to be forward-looking of where the economy is headed for making the decisions."

The dollar index dropped to a low of 102.16, a near 7-month low, before recovering to 102.67, still remaining well below the previous close of 103.21.

The dollar weakened to 1.0957 against the Euro. Against Pound Sterling, it pared some early gains and was trading at 1.2773 a little while ago.

The dollar weakened against the Japanese currency, dropping to 141.69 in the Asian session, but recovered some lost ground as the day progressed. Still, at 144.07 yen, the dollar was down as much as 1.7% from Friday's close.

Against the Aussie, the dollar was firm at 0.6496. The dollar weakened against Swiss franc, easing to CHF 0.8518. The Loonie firmed to 1.3830 a unit of the greenback.