The dollar is trading mixed versus its major rivals on Monday, following the release of the weaker than expected U.S. ISM Manufacturing result for May. Weak manufacturing data was reported worldwide at the beginning of the new trading week, with lower than expected numbers from China and across Europe as well. The data is further evidence of the economic slowdown and has led investors to speculate that further economic stimulus may be close at hand.
Activity in the U.S. manufacturing sector contracted more than expected in the month of June, according to a report released by the Institute for Supply Management on Monday. With the bigger than expected decrease, the index pointed to a contraction for the first time since July of 2009, when it showed a reading of 49.2.
The ISM said its purchasing managers' index dropped to 49.7 in June from 53.5 in May, with a reading below 50 indicating a contraction in manufacturing activity. Economists had expected the index to show a much more modest decrease to a reading of 52.0.
French economic growth will be weaker than estimated earlier in 2012 and 2013, Finance Minister Pierre Moscovici indicated in an interview. Moscovici said the economic growth may reach around 0.4 percent in 2012, slightly weaker than 0.5 percent predicted earlier. The statistical office forecasts 0.4 percent growth for the economy this year. In 2013, an expansion within 1 to 1.3 percent appears "more credible," he told Figaro newspaper. The growth rate for 2013 was earlier set at 1.7 percent.
France may need up to 33 billion euros to cover the deficit gap in 2013, the national auditor said Monday in an annual report on the country's public finances. The country will have to find 6-10 billion euros in savings to meet this year's budget reduction target, the report pointed out. The Court of Auditors also said it sees the risk of acute revenue shortages during the coming months.
The greenback has rebounded from Friday's sharp losses versus the Euro on Monday. The currency has bounced back from Friday's low of $1.2692, back to around $1.2585.
Eurozone unemployment rate hit a new record high in May as companies struggle to contain their costs in the midst of stringent competition and weak demand. The jobless rate rose to a record 11.1 percent from 11 percent in April, Eurostat said Monday. The figure was in line with expectations.
The Eurozone Purchasing Managers' Index for the manufacturing sector remained unchanged in June from the prior month, but stayed slightly above the flash estimate, final data from Markit Economics showed Monday. The index was flat at 45.1 in June signaling that the downturn in the manufacturing sector extended to an eleventh successive month. The reading was above the flash reading of 44.8.
The dollar has remained basically flat in comparison to the pound sterling at the start of the new trading week, continuing to hover around the $1.57 level.
An indicator measuring the performance of the British manufacturing sector rose more than expected in June, but the index still pointed to a decline in activity rates. A survey by Markit Economics showed that the purchasing managers' index for the manufacturing sector rose to 48.6 in June from May's three-year low of 45.9. Economists expected an increase to 46.5.
The buck has pulled back from Friday's nearly one-week high of Y79.979 versus the Japanese Yen, to around Y79.400 on Monday.
U.S construction spending increased by more than expected in May even as revised figures showed stronger than initially reported construction spending growth in April, according to figures released Monday by the Commerce Department.
The initial estimate for construction spending in May came in at a seasonally adjusted annual rate of $830 billion, a 0.9 percent increase from revised April estimates. Although most economists had expected construction spending to increase in May, most had predicted a far more modest 0.2 percent increase.
by RTT Staff Writer
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