October 3, 2019 / 2:36 PM / 2 months ago

FOREX-Dollar tumbles after weak U.S. services data

    * U.S. ISM services sector index falls in September
    * Dollar drops to 4-week low vs yen, one-week low vs euro
    * Fed cut chances this month rises  
    * Sterling rallies on hopes of Brexit deal
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Oct 3 (Reuters) - The dollar fell to a four-week low against the yen and a one-week trough
versus the euro on Thursday, as investors fretted that weakness in both U.S. manufacturing and service
sectors could lead to a slowdown in the world's largest economy. 
    "It appears that the U.S. is now catching down with rest of the G10," said Ranko Berich, head of
market analysis at Monex Europe in London.
    "So although it's not a surprise that major G10 economies are seeing a manufacturing shock and it is
spreading to the rest of their economies, it is new information that we are now seeing this dynamic emerge
in the United States," he added.
    Expectations that the U.S. economy would continue to outperform other major economies and put pressure
on the Federal Reserve to slow its interest rate cutting cycle were dampened this week after weak
manufacturing and service sector surveys.
    Data on Thursday showed that the Institute for Supply Management's services sector index fell to 52.6
in September from 56.4 the previous month. The survey's employment index slid to 50.4 from 53.1 in August.
September's employment index was the lowest since February 2014.
    The U.S. services data followed Tuesday's U.S. manufacturing report, which presented a dire picture of
the sector, with the ISM reading falling to its lowest level in more than 10 years.
    In midmorning trading, the dollar was down 0.6% against the yen, at 106.52 yen, falling to its
lowest level in four weeks at 108.49 right after the ISM non-manufacturing report.
    The dollar index fell 0.3% to 98.74, with the euro up 0.2% at $1.0983. The euro rose to
a one-week high of $1.0999 after the data. 
    Investors are now waiting for Friday's employment report to confirm or quell recession worries. 
    Rate futures have factored in another 25 basis-point easing at the upcoming Federal Reserve policy
meeting later this month following weakness in the U.S. manufacturing data. Chances for a cut have jumped
to nearly 75% after the market largely ruled out the move after what seemed like a hawkish cut last month.
    "It's increasingly difficult for the hawkish members of the Fed to argue that what we're seeing is a
transitory disruption in the survey data," Monex's Berich said.
    The dollar has broadly gained in recent weeks as investors added long positions on expectations that
other major economies, led by Europe, will underperform the United States.
    Latest futures data show long dollar bets at a 3-month high.
    Elsewhere, sterling rallied 0.9% against the dollar to $1.24 after the head of a group of
euroskeptic lawmakers in Prime Minister Boris Johnson's Conservative Party said on Thursday the
government's latest Brexit proposals offered the possibility of a "tolerable deal".
    Currency bid prices at 10:17AM (1417 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.0983        $1.0958     +0.23%         -4.24%      +1.0999     +1.0942
 Dollar/Yen       JPY=        106.6100       107.1700    -0.52%         -3.31%      +107.2900   +106.4900
 Euro/Yen         EURJPY=     117.10         117.44      -0.29%         -7.23%      +117.6400   +117.1000
 Dollar/Swiss     CHF=        0.9977         0.9967      +0.10%         +1.66%      +1.0027     +0.9962
 Sterling/Dollar  GBP=        1.2400         1.2300      +0.81%         -2.80%      +1.2410     +1.2267
 Dollar/Canadian  CAD=        1.3337         1.3321      +0.12%         -2.20%      +1.3347     +1.3313
 Australian/Doll  AUD=        0.6734         0.6703      +0.46%         -4.47%      +0.6741     +0.6703
 Euro/Swiss       EURCHF=     1.0961         1.0923      +0.35%         -2.60%      +1.0979     +1.0920
 Euro/Sterling    EURGBP=     0.8856         0.8904      -0.54%         -1.42%      +0.8921     +0.8848
 NZ               NZD=        0.6302         0.6267      +0.56%         -6.18%      +0.6310     +0.6256
 Dollar/Norway    NOK=        9.1281         9.1291      -0.01%         +5.67%      +9.1534     +9.1228
 Euro/Norway      EURNOK=     10.0270        10.0070     +0.20%         +1.22%      +10.0391    +9.9931
 Dollar/Sweden    SEK=        9.8506         9.8706      +0.01%         +9.89%      +9.9112     +9.8418
 Euro/Sweden      EURSEK=     10.8198        10.8186     +0.01%         +5.42%      +10.8461    +10.8111
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; editing by
Jonathan Oatis)
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