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Forex – US dollar falls short on disappointing data

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Forex – US dollar falls short on disappointing data

The US dollar was lower Monday, after disappointing US data reminded investors the Federal Reserve will take its time unwinding record stimulus.

As of 20:30 GMT, the US dollar index was at 80.2, virtually unchanged from its previous close. The dollar faced considerable losses against its northern counterpart, the loonie, as well as the British pound.

The USDCAD pair declined 43 pips to 1.1063 after climbing to a high of 1.1142 in Europe. The pair broadened its gains last week after Canadian wholesale sales, a key component of gross domestic product, declined 1.4 percent to $49.6 billion in December, the lowest level in six months. The pair fell below two supports during the day (1.1111 and 1.10830), leaving 1.1055 as the next support level.

While idle, the British pound managed to notch up fresh gains versus the greenback. The GBPUSD pair rose 30 pips to 1.6662 ahead of the House of Commons Inflation Hearings, which are scheduled for Tuesday.

The economic picture in the United States was mostly negative, as multiple data releases reinforced the Federal Reserve’s decision to taper bond purchases gradually. The US service economy fell sharply in February, as severe weather continued to undermine recovery. Markit Group’s gauge of US services fell 4 percentage points to 52.7.

Meanwhile, the Dallas Fed Manufacturing Activity Index reported almost no expansion in business conditions this month. The February reading of 0.3 is considerably below the previous month’s 3.8.

In a separate report, the Chicago Fed National Activity Index slowed to -0.39 in January, as growth decelerated. Although recession risk remained low in January, the steep drop raises concerns about US GDP growth in the first quarter.

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