SINGAPORE- The dollar nursed losses on Tuesday after an unexpected slowdown in US manufacturing growth prompted investors to trim bets that a booming US economy could boost the greenback.
Data showed shortages of basic materials and transport snarls depressed the Institute for Supply Management manufacturing survey by 4.7 points to 64.7, toppling the dollar from a three-week peak on the yen and a two-week high on the euro.
With Asia trade thinned by holidays in Japan and China, further moves were muted, leaving the dollar to drift up slightly off overnight levels to sit at 109.14 yen and at $1.2054 per euro.
The common currency rose 0.3 percent overnight and found additional support from a surge in German retail sales and record-high euro zone factory activity.
The Australian and New Zealand dollars edged a fraction lower on Tuesday after bouncing overnight, while the US dollar index against a basket of key rivals tacked on 0.05 percent to 91.036.
Traders’ focus is now on services figures due on Wednesday and payrolls data on Friday and markets seem finely balanced. Some analysts say strong figures might boost the dollar by bringing forward expectations for higher interest rates, while others argue that a strong US economy would weigh on the currency as imports gain and the trade deficit grows.
“The ISM manufacturing report did not live up to expectations but payrolls should be at least as strong as consensus expectations,” Westpac analysts said in a note.
