- POSTED: 01 Jul 2014 06:22
The dollar fell against other major currencies on Monday after lacklustre US economic data provided no spur for buying greenbacks.
NEW YORK: The dollar fell against other major currencies on Monday after lacklustre US economic data provided no spur for buying greenbacks.
A better-than-expected surge in US pending home sales in May, by 6.1 per cent, was offset by a slowdown in economic activity in the Chicago region, putting an end to two months of gains.
"It has been a tough month for the US dollar. The greenback lost value against all of the major currencies and on the last day of the quarter, extended its losses," said Kathy Lien of BK Asset Management.
Lien said that a lack of consistently positive US data has left investors with little reason to buy the greenback.
The euro hit US$1.3698 in late morning, its highest level in more than five weeks, before easing back to US$1.3694 in late trade.
The dollar sank as low as 101.21 yen around the same time, also a level last seen more than five weeks ago.
"The main pressure on the dollar comes from the decline in US yields," she said. In late trade, the 10-year Treasury yield was down to 2.52 per cent from 2.53 per cent late on Friday. Bond yields and prices move inversely.
Weak inflation data for the 18-nation eurozone added to fears the bloc could slide into deflation.
The European Union's statistics office Eurostat said in a first estimate that eurozone inflation was 0.5 per cent in June -- the same level as in May.
That marked the lowest inflation level since the financial crisis of 2008-2009 nearly froze the market on which banks lend to each other and caused recession in several advanced economies.
The European Central Bank is so concerned that prices could start falling it has cut its interest rates into negative territory in the hope of boosting lending and pushing inflation back to the bank's target of nearly 2.0 per cent.
"June's weak eurozone inflation figure will add to pressure on the ECB to provide more policy support, particularly given recent signs that the recovery may already be slowing," said Capital Economics senior economist Jennifer McKeown.
But analysts said the ECB was unlikely to make new policy moves at its monthly meeting Thursday, focusing instead on monitoring the impact of last month's unprecedented package of measures.