REUTERS - NEW YORK. A pickup in U.S. manufacturing activity helped send the dollar to its highest level against the euro in three weeks on Monday, while sterling
gained before the British Parliament is due to vote on alternative Brexit options.
The Institute for Supply Management said its index of national factory activity rose to a reading of 55.3 in March from 54.2 in February, which had marked the lowest level
since November 2016.
That overcame a separate release that showed that retail sales dropped 0.2 percent in February as households cut back on purchases of furniture, clothing, food and electronics and appliances, as well as building materials and gardening equipment.
Data for January was revised higher to show retail sales increasing 0.7 percent instead of gaining 0.2 percent as previously reported.
The dollar dipped briefly on the retail sales data before erasing the losses and then subsequently gaining on the manufacturing data.
The retail sales revisions for January likely helped the dollar, with people "getting a little bit of comfort from those, although I think on net the numbers are probably
negative overall for the U.S. economy,” said Erik Nelson, a currency strategist at Wells Fargo in New York.
A weakening U.S. economy would also result in lower stocks, which would boost the dollar, Nelson said. “That’s the dynamic we’ve seen in the last year or so,” he said.
Euro zone headline and core inflation, meanwhile, slowed in March, supporting the European Central Bank’s decision to delay a planned tightening of monetary policy.
Sterling was up before Parliament was again set to try to take control of Britain's departure from the European Union, with some hoping that the current uncertainty will end
in a softer Brexit than Prime Minister Theresa May's defeated withdrawal agreement.
Commodity currencies including the Australian dollar gained after Chinese factory activity unexpectedly grew for the first time in four months in March, suggesting
government stimulus measures may be starting to take hold in the world’s second largest economy.
(Editing by Susan Thomas and Chizu Nomiyama)
Editor: Hasbi Maulana
Editor: Hasbi Maulana