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Economic Optimism Continues To Weigh On U.S. Dollar

With continued optimism about the economy reducing the appeal safe havens like the U.S. dollar, the greenback has moved to the downside on Monday.

Currently, the dollar is trading at 107.59 yen versus the 107.83 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is valued at $1.1132 compared to Friday's $1.1101.

The U.S. dollar index has also moved to the downside on the day, sliding by 0.6 percent to its lowest levels in well over two months.

The continued weakness in the value of the dollar came following the release of a report from the Institute for Supply Management showing U.S. manufacturing activity contracted at a slower rate in the month of May.

The ISM said its purchasing managers index rose to 43.1 in May from 41.5 in April, coming in just below economist estimates for a reading of 43.6.

While the index rebounded from its lowest level since April of 2009, a reading below 50 still indicates a contraction in manufacturing activity.

Nonetheless, Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, said the latest figure indicates expansion in the overall economy after April's contraction.

The report from the ISM came on the heels of a private survey showing the Chinese manufacturing sector expanded in May.

The Caixin manufacturing PMI score came in at 50.7 in May, beating expectations for a score of 49.6 and up from 49.4 in April. A reading above 50 indicates an expansion in manufacturing activity.

A separate report from the Commerce Department showed a sharp pullback in U.S. construction spending in the month of April, although the decrease was much smaller than economists had expected.

Traders remain generally optimistic about economies reopening despite political unrest across the country following the death of George Floyd, which has forced a number of major retailers to temporarily close their stores in areas hit hard by protests.

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