Dollar slips vs euro, pound on mixed economic data

  • Business
  • Thursday, 02 Jul 2009

NEW YORK (AP) - The dollar was lower against most major currencies Wednesday on mixed economic reports that showed more stable manufacturing activity and a rise in pending home sales.

Investors were also awaiting data on unemployment for June to be released Thursday, as well as an interest rate decision by the European Central Bank.

The 16-nation euro bought $1.4148 in late New York trading, up from the $1.4042 it bought late Tuesday. The British pound inched up to $1.6474 from $1.6462.

The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index registered 44.8 in June, up from 42.8 in May. Analysts polled by Thomson Reuters had expected a reading of 44.5.

A reading below 50 indicates contraction. June's reading marks the 17th straight month of deterioration in manufacturing.

The National Association of Realtors, meanwhile, said pending home sales rose for a fourth straight month in May. The index of pending sales, which tracks signed contracts to purchase previously owned homes, rose 0.1 percent to 90.7, better than expected.

Also Wednesday, a Commerce Department report showed that construction spending fell 0.9 percent in May, nearly double the 0.5 percent economists had expected, and activity in the past two months was revised lower.

The ECB is expected to keep its key interest rate unchanged at 1 percent at its meeting in Luxembourg Thursday and will likely cautiously note some signs that the euro zone economy is stabilizing following unprecedented liquidity injections and big declines in the cost of borrowing.

Higher interest rates can support a currency as investors steer funds to better returns in investments denominated in that currency.

Currency trading may gain further direction from Thursday's U.S. non-farm payrolls report. U.S. markets are closed Friday in observance of the Independence Day holiday.

In other late trading Wednesday, the dollar dropped to 1.1490 Canadian dollars from 1.1621 late Tuesday, and fell to 1.0747 Swiss francs from 1.0853 francs. The dollar rose to 96.52 Japanese yen from 96.32 yen.

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