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Dollar Trading Mixed On Inflation Concerns


The dollar is turning in a mixed performance against its major rivals Monday afternoon. Inflation concerns have risen to the forefront at the start of the new trading week. The strong U.S. jobs report at the end of the prior week has convinced investors that the Federal Reserve will likely raise interest rates at its next meeting.

The U.S. ISM services index hit its highest level since mid-2005, a sign of further strength in the nation's economy. Economic activity in the non-manufacturing sector grew in January for the 96th consecutive month, according to a survey of purchasing managers.

The ISM's NMI index registered 59.9 percent, which is 3.9 percentage points higher than the seasonally adjusted December reading of 56 percent. Economists had expected a reading of 56.2.

Meanwhile, coalition negotiations between German Chancellor Angela Merkel's conservative party and the Social Democrats broke down over the weekend.

The dollar has climbed to around $1.2415 against the Euro Monday afternoon, from an early low of $1.2474.

The euro area economy expanded at the fastest pace since mid-2006 in January, final data from IHS Markit showed Monday. The final composite output index rose more than initially estimated to 58.8 in January from 58.1 in December. The flash score was 58.6.

Eurozone investor confidence weakened in February, survey data from think tank Sentix showed Monday. The investor sentiment index fell unexpectedly to 31.9 from 32.9 in January. The score was forecast to rise to 34.5.

Eurozone retail sales declined in December after recovering a month ago, Eurostat reported Monday. The volume of retail trade dropped 1.1 percent month-on-month in December, in contrast to the 2 percent rise posted in November. Sales were forecast to drop 1 percent.

The buck has risen to around $1.4015 against the pound sterling this afternoon, from an early low of $1.4150.

British service sector activity expanded at a slower pace in January, largely reflecting weak gains in new work as Brexit remains the main course of concern, survey data from IHS Markit showed Monday. The IHS Markit/Chartered Institute of Procurement & Supply Purchasing Managers' Index, dropped more-than-expected to 53.0 in January from 54.2 in December. The expected reading was 54.0.

The greenback reached a high of Y110.259 against the Japanese Yen Monday, but has since retreated to around Y109.865.

Japan's service sector activity expanded at a slightly faster pace in January, results of a survey by IHS Markit showed Monday. The seasonally adjusted services purchasing managers' index, or PMI, rose to 51.9 in January from 51.1 in December.

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