October 1, 2019 / 3:11 PM / 21 days ago

FOREX-Dollar falters after soft U.S. manufacturing data

    * U.S. ISM manufacturing index falls in September
    * U.S. construction spending rises less than expected
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Adds analyst comment, U.S. data, FX table, updates prices, changes dateline, previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 1 (Reuters) - The dollar fell against the euro and the yen on Tuesday after data showed
weakness in the U.S. manufacturing sector and a lower-than-expected rise in construction spending.
    Against a basket of six major currencies, the greenback fell from a roughly 2-1/2-year peak hit
earlier in the session to trade little changed on the day.
    Data showed the U.S. manufacturing sector contracted in September to its weakest level in more than a
decade as business conditions worsened amid trade tensions between China and the United States.

    The Institute for Supply Management (ISM) said its index of national factory activity fell to 47.8,
the lowest reading since June 2009. A reading below 50 signals the domestic factory sector is contracting.

    "The ISM manufacturing data was pretty poor. No matter how much you slice and dice it, it's a pretty
negative report," said Mazen Issa, senior FX strategist at TD Securities in New York.
    "Most of the weakness in the dollar has been mostly concentrated against the reserve currencies, so
against the yen and euro," he added.
    The dollar was also pressured by a report showing U.S. construction spending barely rose in August, as
the largest increase in private residential investment in nine months was offset by a second straight
monthly decline in outlays on nonresidential projects.
    That said, the dollar's outlook remained solid despite Tuesday's weak data, analysts said.
    "The only concern there is that the ISM report could inspire far more rapid easing from the Federal
Reserve," said TD's Issa. "But even if they do cut, the yield advantage still remains quite high in the
U.S."
    With rate cuts in Australia, final PMI readings in Europe at seven-year lows and weak confidence
readings in Japan, the dollar scored its biggest quarterly gain in the third quarter since June 2018.
    On Tuesday, a September survey showed euro zone manufacturing activity had contracted the most in
almost seven years.
    In late morning trading, the dollar index was little changed at 99.353, after earlier touching
99.58, its highest level since May 2017. The next target for the dollar is the January 2017 high of
103.82.
    The euro was up 0.2% against the dollar at $1.0912.
    The weakness in economic indicators was not confined to Europe. Japanese big manufacturers' business
confidence worsened to a six-year low in the July-September quarter, the Bank of Japan's closely watched
Tankan survey showed.
    Against the yen, the dollar fell 0.2% to 107.86 yen.
    Elsewhere, the Australian dollar was the main underperformer in the G10 after the Reserve Bank of
Australia cut interest rates and expressed concern about job growth.
    The Australian dollar fell 0.9% to $0.6689 after the RBA cut its cash rate to a record low of
0.75%, as expected.
    
    ========================================================
    Currency bid prices at 10:51AM (1451 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.0912        $1.0898     +0.13%         -4.86%      +1.0921     +1.0880
 Dollar/Yen       JPY=        107.8900       108.0600    -0.16%         -2.15%      +108.4600   +107.8300
 Euro/Yen         EURJPY=     117.75         117.79      -0.03%         -6.71%      +118.1600   +117.6800
 Dollar/Swiss     CHF=        0.9972         0.9978      -0.06%         +1.61%      +1.0016     +0.9969
 Sterling/Dollar  GBP=        1.2233         1.2287      -0.44%         -4.11%      +1.2313     +1.2208
 Dollar/Canadian  CAD=        1.3261         1.3239      +0.17%         -2.76%      +1.3290     +1.3234
 Australian/Doll  AUD=        0.6689         0.6749      -0.89%         -5.11%      +0.6775     +0.6673
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0883         1.0876      +0.06%         -3.30%      +1.0920     +1.0873
 Euro/Sterling    EURGBP=     0.8919         0.8867      +0.59%         -0.72%      +0.8936     +0.8847
 NZ               NZD=        0.6231         0.6261      -0.48%         -7.24%      +0.6272     +0.6204
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.1302         9.0935      +0.40%         +5.69%      +9.1476     +9.0913
 Euro/Norway      EURNOK=     9.9642         9.9127      +0.52%         +0.59%      +9.9681     +9.9082
 Dollar/Sweden    SEK=        9.9008         9.8408      +0.75%         +10.45%     +9.9303     +9.8405
 Euro/Sweden      EURSEK=     10.8065        10.7261     +0.75%         +5.29%      +10.8110    +10.7209
 
    
 (Reporting by Gertrude Chavez-Dreyfuss in New York
Additional reporting by Saikat Chatterjee in London
Editing by Larry King and Matthew Lewis)
  
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