(Updates prices, adds comments; changes byline, dateline,
* Core PCE falls 0.1 percent in March
* U.S ISM factory activity reading weakest since Dec
* Euro hits session high of $1.0923
* Liquidity thin amid May Day holiday
* Fed meeting eyed this week
By Sam Forgione
NEW YORK, May 1 The U.S. dollar edged lower
against the euro and eased off a one-month high against the yen
on Monday after weak U.S. factory and inflation data did not
boost expectations for a June interest rate hike from the
The personal consumption expenditures (PCE) price index
excluding food and energy slipped 0.1 percent in March, the
first and largest drop since September 2001. In the 12 months
through March, the so-called core PCE price index increased 1.6
percent, the smallest gain since last July.
That reading of the core PCE, which is the Fed's preferred
inflation measure, fell short of the central bank's 2 percent
In addition, the Institute for Supply Management (ISM) said
its index of national factory activity dropped to a reading of
54.8 last month, the weakest reading since December.
"We’re sort of knee-deep in a soft patch of numbers," said
Richard Franulovich, senior currency strategist at Westpac
Banking Corp in New York. He also cited U.S. first-quarter gross
domestic product growth data last week that showed the U.S.
economy grew at its weakest pace in three years.
"If the numbers continue to come out on the weaker side of
expectations for the next two or three months, then I would say
yes, the Fed would be revising their expectations for the
economy," he said, but added that the Fed would likely label the
weak U.S. economic data as "transitory" in the central bank's
Wednesday policy statement.
The euro was last up 0.2 percent against the dollar at
$1.0912, after touching a session high of $1.0923
following the data. That session peak remained below last week's
5-1/2-month high of $1.0950. The dollar was last slightly higher
against the yen at 111.63 yen but below a one-month high
of 111.91 touched before the data.
The dollar's weakness was minor since the data, while
failing to bolster expectations of a June Fed rate hike, did
little to convince investors that the Fed would forgo hiking
rates in June.
Trading was thin, with several markets across Asia and
Europe closed for the May Day holiday.
The data was enough, however, to lead the euro to extend its
gains after jumping 2.3 percent against the greenback in April.
"You’ve got some numbers today that are promoting the same
story that maybe growth isn’t there," said Douglas Borthwick,
managing director at Chapdelaine Foreign Exchange in New York.
(Editing by Bernadette Baum)