Dollar Falls against the Euro on Weak U.S. Business Activity Report

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Dollar Falls against the Euro on Weak U.S. Business Activity ReportThe dollar declined to its lowest level in one month against the euro after a measure of U.S. business activity plunged more than expected, fuelling speculation that the economy is slowing down.

The dollar plunged 0.3 percent versus the euro to trade at $1.3692 as of 1:32 p.m. in New York. The U.S. currency tumbled 0.2 percent to `101.27 yen after earlier surging to 101.24, its lowest level since May 21. The yen fell 0.2 percent to 138.66 against the euro.

“The dollar has been heavy for a few weeks now and it’s really a continuation of that trend,” Adam Cole, a London-based head of Group of 10 currency strategy at Royal Bank of Canada spoke to Bloomberg. “It’s being driven by a combination of low yields and low volatility, and the dollar is just being dragged lower in the environment generally.”

The business index compiled by the Institute of Supply Management-Chicago Inc declined to 62.6 in June from May’s reading of 65.5.

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The Canadian dollar temporarily declined from its highest point since January following the release of a report that showed that the country’s economy expanded much slower than expected.  The loonie remained slightly unchanged at C$1.0667 per U.S. dollar on Monday trading, after earlier declining by up to 0.3 percent. Canada’s economy expanded by 2.1 percent in April from 12 months earlier, reported the Statistics Canada.

The Norwegian krona fell to a four-month low against the euro after retail sales shrunk more than expected. The krona declined 0.4 percent to trade at 8.3970 per euro after plunging to 8.4195, the lowest point since February 10. This is after retail sales plunged 0.9 percent in May, more than the 0.3 percent decline that economists had forecasted. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com