December 2, 2019 / 4:26 PM / 3 months ago

FOREX-Dollar slides to two-week low after soft U.S. manufacturing data

    * U.S. ISM manufacturing in November contracts for a fourth month
    * U.S. construction spending falls in October
    * Graphic: World FX rates in 2019 

 (Recasts, adds U.S. data, new comment, FX table, updates prices, changes byline, dateline; previous
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Dec 2 (Reuters) - The dollar fell to two-week lows on Monday after data showed the U.S.
manufacturing sector contracted for a fourth straight month in November and construction spending fell
unexpectedly, stoking fears the world's largest economy could go into recession.
    The greenback also dropped from six-month highs against the yen and slid to a two-week trough versus
the euro after the U.S. manufacturing report.
    The Institute for Supply Management's (ISM) index of national factory activity fell to 48.1 in
November from 48.3 in October, down for a fourth month. The reading was below expectations of 49.2 from a
Reuters poll of 57 economists.
    A separate report on Monday showed U.S. construction spending in October dropped as well, falling 0.8%
as investment in private projects tumbled to the lowest level in three years.
    "What this means for the dollar is that we could potentially see another rate cut from the Federal
Reserve next year," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
    The Fed has cut interest rates three times this year and at its last monetary policy meeting it
signaled it would be data-dependent going forward.
    "We could also require additional monetary stimulus and as a result yields are coming under a little
pressure and you're seeing other counterpart currencies gaining," Schamotta added.
    In late morning trading, the dollar index was last down 0.3% at 97.942 after dropping to
97.917, a two-week low.
    The drop in the dollar index pushed the euro to a two-week high. It was last up 0.5% at $1.1070
    The dollar also fell 0.2% against the yen, to 109.12 yen, after hitting 109.72 yen, the highest
since May.
    Earlier in the session the greenback gained against the yen after an unexpected rebound in Chinese
manufacturing activity lifted hopes of a brighter outlook for world growth. 
    Prior to Monday's U.S. manufacturing data, the greenback had been on an uptrend against the yen for
the last few weeks, rising in seven of nine sessions.
    The latest data out of China, the world's second-biggest economy, set the tone for currency markets.
Chinese factory activity expanded at the quickest pace in almost three years in November, a private
business survey showed on Monday, following upbeat official data over the weekend.

    The survey also showed total new orders and factory production at buoyant levels.
    In other trading, sterling was down 0.1% at $1.2920 as polls pointed to a narrowing lead for
the governing Conservative Party before the UK's Dec. 12 election.
    "There are increasing parallels with the way polls played out in 2017 with what we're seeing now, so
that could cap the upside for sterling," said Jeremy Stretch, head of G10 FX strategy at CIBC capital
markets, referring to the last UK election two years ago.
    Currency bid prices at 11:0 4AM (1604 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1074        $1.1015     +0.54%         -3.44%      +1.1076     +1.1004
 Dollar/Yen       JPY=        109.0800       109.5100    -0.39%         -1.07%      +109.7200   +109.0900
 Euro/Yen         EURJPY=     120.81         120.64      +0.14%         -4.29%      +121.0100   +120.5300
 Dollar/Swiss     CHF=        0.9923         0.9998      -0.75%         +1.11%      +1.0008     +0.9925
 Sterling/Dollar  GBP=        1.2926         1.2933      -0.05%         +1.32%      +1.2941     +1.2897
 Dollar/Canadian  CAD=        1.3300         1.3275      +0.19%         -2.47%      +1.3306     +1.3273
 Australian/Doll  AUD=        0.6816         0.6764      +0.77%         -3.31%      +0.6817     +0.6756
 Euro/Swiss       EURCHF=     1.0990         1.1014      -0.22%         -2.35%      +1.1027     +1.0983
 Euro/Sterling    EURGBP=     0.8566         0.8520      +0.54%         -4.65%      +0.8572     +0.8515
 NZ               NZD=        0.6500         0.6420      +1.25%         -3.23%      +0.6506     +0.6425
 Dollar/Norway    NOK=        9.1557         9.2187      -0.68%         +5.98%      +9.2188     +9.1524
 Euro/Norway      EURNOK=     10.1389        10.1583     -0.19%         +2.35%      +10.1599    +10.1110
 Dollar/Sweden    SEK=        9.5367         9.5717      +0.12%         +6.39%      +9.5882     +9.5277
 Euro/Sweden      EURSEK=     10.5623        10.5495     +0.12%         +2.91%      +10.5663    +10.5250
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Dhara Ranasinghe in London; Editing by
Dan Grebler)
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