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European Session – Euro steady but dollar lower on manufacturing data

Major currencies were mostly steady on Monday and manufacturing data had limited impact. Earlier in the day, weak manufacturing PMI from China added more worries on the growth outlook in the world’s second largest economy.

Eurozone final manufacturing PMI was slightly better-than-expected in July at 52.4, and an improvement on June’s 52.2. There was strong growth in the Netherlands, Spain, Italy and Austria. But France was the only other nation apart from Greece that had a reading below 50, which indicates contraction.

Manufacturing activity in Greece fell to a record low in June, which did not come as too much of a surprise following a month where capital controls and bank closures were imposed. The Athens Stock Exchange, which reopened on Monday for the first time in five weeks, plummeted by over 20% before paring loses to 16% in late European trading.

The euro was stuck in a tight range between 1.0941 and 1.0995 against the dollar and was trading at 1.0975 in late European session. It was also steady against the pound at 0.7028 and the yen at 136.11.

UK manufacturing PMI was also above estimates at 51.9 in July, versus forecasts of 51.6, and higher than June’s 51.4. But concerns that the strong pound may be hurting UK manufacturers, which in turn would drag down growth, weighed on cable. The pound hit a low of 1.5564 against the dollar, before rebounding back above the 1.56 handle to 1.5616.

The dollar was little moved from personal spending data, which came within forecasts at 0.2% month-on-month in June. But May’s figure was revised down to 0.7% from 0.9%. Spending on durable goods such as automobiles, which were up sharply in May, fell back in June. Personal income was higher by 0.4% over the month, coming in slightly above expectations of 0.3%. The personal consumption expenditure (PCE) price index, which is one of the measures that the Fed uses for its inflation assessment, was also slightly above estimates at 0.3% year-on-year. While the core PCE price index was steady at 1.3% from an upwardly revised 1.3% in May.

In other data for the US, the ISM manufacturing index disappointed at 52.7 in July, which was below forecasts that it would stay unchanged 53.5. The Markit manufacturing PMI, also out today, was unchanged at 53.8 in June. The dollar had been steadily moving higher against the yen, peaking at 124.26, but went into reverse after the ISM numbers, dropping to 124.02 in early US session.

The Canadian-dollar fell to new 11-year lows against the greenback as oil prices continued to slide downwards on oversupply and weakening demand from China. The greenback climbed to 1.3130 against the loonie in late European session.

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