WASHINGTON (dpa-AFX) - After losing ground in early Asian deals, the U.S. dollar rebounded on Tuesday after data showed a notable expansion in U.S. manufacturing activity in the month of August.
The dollar index, which dropped to 91.75, hitting a more than 2-year low in process, rallied to 92.40 later on in the session, and was last seen at 92.31, up 0.18% from previous close.
Fears about the pace of economic recovery, uncertainty ahead of the U.S. presidential election in November and speculation that the Federal Reserve will keep interest rates very low for years, all contributed to dollar's early weakness.
The dollar recovered after the Institute for Supply Management released a report showing manufacturing activity in the U.S. expanded at a faster rate in the month of August.
The ISM said its purchasing managers index rose to 56.0 in August from 54.2 in July, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 54.5.
Against the Euro, the dollar firmed up to 1.1902 before paring some gains. It was up by about 0.2% at $1.1914 against the euro around late afternoon. The euro area manufacturing Purchasing Managers' index fell slightly to 51.7 in August from 51.8 in July. The reading matched the flash estimate.
Eurozone consumer prices fell 0.2% year-on-year in August, reversing a 0.4% rise in July, preliminary data from Eurostat revealed. Prices were expected to climb 0.2%.
The euro area jobless rate rose to 7.9% in July from 7.7% in June. The rate was marginally below the expected level of 8%. The number of people out of work increased by 344,000 from June to 12.793 million in July.
The Pound Sterling was stronger with a unit of sterling fetching $1.3384, up 0.12% from Monday's close of $1.3368. The UK manufacturing sector expanded at the fastest pace in two-and-a-half years in August as companies restarted operations following coronavirus disease 2019 lockdowns, final data from IHS Markit showed.
The IHS Markit/Chartered Institute of Procurement & Supply manufacturing Purchasing Managers' Index rose to a 30-month high of 55.2 in August from 53.3 in July. But this was slightly below the flash estimate of 55.3.
The Japanese Yen was down slightly at 105.96 a dollar, losing ground from 105.90 yen a dollar. In economic news from Japan, the manufacturing sector continued to contract in August, albeit at a slower pace, the latest survey from Jibun bank revealed today with a manufacturing PMI score of 47.2, up from 45.2 in July.
The unemployment rate in Japan came in at a seasonally adjusted 2.9% in July. That was beneath expectations for 3%, although it was up from 2.8% in June. ar.
Against the Aussie, the dollar recovered from $0.7414 to $0.7372, down just marginally from previous close.
The Swiss franc was trading at 0.9094 a dollar, losing more than 0.6%, while the Loonie was down 0.17% at C$1.3069 a dollar. Canada's manufacturing sector activity expanded for a second consecutive month in August thanks to improvement in market conditions following reopening of businesses.
The IHS Markit Canada Manufacturing PMI rose to 55.1 in August 2020, up from 52.9 in the previous month. It was the steepest expansion in factory activity since August 2018.
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