Dollar Rally Pauses as Pound Gains
The dollar rally paused Tuesday against its rivals as mixed U.S. economic data and a rise in the pound weighed on sentiment.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.02% to 94.40.
Preliminary U.S. manufacturing PMI for July topped expectations, while the services PMI fell marginally short of forecasts. But the data indicated the economy remains on solid footing.
"The July survey data indicate that the US economy sustained strong growth momentum after what looks to have been a solid second quarter, representing a good start to the second half of 2018," Chris Williamson, Chief Business Economist at IHS Markit said.
The strength of U.S. manufacturing was echoed by a regional survey on U.S. manufacturing growth, which also came in above economists' estimates.
The Richmond Fed manufacturing index fell 1 point to a reading of 20 in July. Any reading above zero indicates improving conditions.
The U.S. data, however, did little to derail investor expectation that the U.S. economy generated strong growth in the second quarter. Expectations for a bullish GDP print on Friday were strengthened somewhat as Fox Business Network reported that President Donald Trump has been telling associates that he expects the number around 4.8%.
Economists expect U.S. second-quarter GDP to come in at 4.1%.
A stronger pound, meanwhile, limited the dollar's recovery as British Prime Minister Theresa May said Tuesday she would lead Brexit negotiations with European Union.
GBP/USD rose 0.29% to $1.3140.
EUR/USD, meanwhile, struggled to hold gains to trade at $1.1683, down 0.08%, after bouncing from a session low of $1.1655 amid mixed EU services and manufacturing data.
The euro will likely be closely watched ahead of a meeting on trade between Trump, European Commission President Jean-Claude Juncker and European Union Trade Commissioner Cecilia Malmström at the White House in Washington Wednesday.
USD/CAD fell 0.08% to C$1.3162, while USD/JPY fell 0.04% to Y111.28.