Dollar dips on soft manufacturing data

The dollar fell against a basket of major currencies on Monday, after weaker than expected U.S. manufacturing data weighed on sentiment while a surge in the Canadian dollar added to downside momentum.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.25% to 98.80 by 13:08 EDT.

The Federal Reserve Bank of New York said its Empire State manufacturing index fell last month to minus 1, from 5.2 in April, as new orders dipped and shipment grew more quickly.

The softer manufacturing print dented traders’ expectations for a June rate – according to investing.com’s Fed rate monitor tool 70% of traders expect the Federal Reserve to hike its benchmark rate in June compared to nearly 80% of traders in the previous week.

Meanwhile, oil-sensitive currencies soared, after Saudi and Russian energy ministers said on Monday that they would support an extension of the supply-cut agreement into 2018.

USD/CAD commonly referred to as the ‘loonie’ traded at $1.3647, down 0.50%, while the USD/RUB slipped to a three-low of 56.34.

Elsewhere, the EUR/USD rose 0.38% to $1.0974 while the EUR/GBP gained 0.28% to trade at 0.8502.

The dollar held firm against its yen counterpart, as USD/JPY traded at 113.59, up 0.19%, despite the return of geopolitical jitters, after North Korea confirmed that it had carried out a missile test on Sunday.

GBP/USD added 0.38% to trade at $1.2907 while GBP/JPY rose by 0.31% to 146.62.

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