WASHINGTON (dpa-AFX) - The U.S. dollar rose to a more than 2-year high on Tuesday amid global economic slowdown and dovish policy stance by most of the central banks across the globe.
The dollar index rose to a high of 99.37, but retreated in mid morning trade after data showed a contraction in U.S. manufacturing activity in the month of August.
The euro, which was trading at $1.0927 early on in the session, recovered to $1.0980 by mid morning before losing some ground and dropping to $1.0966.
Eurozone producer price inflation eased to the lowest since late 2016 in July largely reflecting weak energy prices, data from Eurostat showed Tuesday.
Producer prices grew 0.2% annually in July, as expected, following a 0.7% rise in June. This was the lowest inflation since November 2016, when the rate was 0.1%.
The sterling dropped to a near three-year low to $1.1960 amid political uncertainty in the U.K., but later regained some lost ground and was moving around $1.2080, gaining about 0.12%.
Data from IHS Markit's purchasing managers' survey showed UK construction sector contracted for the fourth consecutive month in August as new work declined the most in over ten years, leading business optimism to plummet to over a decade-low.
The yen was up 0.15%, with a dollar fetching 106.06 yen, as compared to 106.22 yen on Friday. Earlier in the day, the yen had weakened to 106.38.
The dollar was up against the loonie at 1.3339, down 0.6% against the Aussie at 0.6759 after the Australian central bank left its interest rate unchanged.
Against Swiss franc, the dollar was down 0.3% at 0.9876.
A report from the Institute for Supply Management today showed U.S. manufacturing activity contracted for the first time in three years.
The ISM said its purchasing managers index fell to 49.1 in August after dipping to 51.2 in July, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to edge down to 51.0.
With the bigger than expected decrease, the PMI dropped below 50 for the first time since August of 2016 and hit its lowest level since January of 2016.
Meanwhile, a report released by the Commerce Department showed construction spending in the U.S. inched up by 0.1% to an annual rate of $1.289 trillion in July, after sliding by 0.7% to a revised June rate of $1.288 trillion. Economists had expected construction spending to rise by 0.3% compared to the 1.3% nosedive originally reported for the previous month.
On the trade front, U.S. President Donald Trump indicated U.S. and Chinese officials still plan to meet for trade talks this month but argued the U.S. 'can't allow China to rip us off anymore as a country.'
In a series of tweets this morning, Trump threatened to get tougher on China if he wins re-election and dismissed suggestions that he work with the European Union to go after Chinese trade practices.
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