* Dollar index drops from 2-1/2-year high
* U.S. ISM manufacturing index falls in September
* U.S. construction spending rises less than expected
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new comments, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 1 (Reuters) - The dollar fell from its highest
level in more than two years on Tuesday, undermined by data
showing weakness in the U.S. manufacturing sector and a
lower-than-expected rise in construction spending.
Against the yen, the dollar slid from two-week highs, as the
weak manufacturing report fueled concerns the United States may
be headed for recession.
Data showed the U.S. manufacturing sector contracted in
September to its weakest level in more than a decade as business
conditions worsened amid U.S.-China trade tensions. The Institute for Supply Management (ISM) said its index of
national factory activity fell to 47.8, the lowest reading since
June 2009. A reading below 50 signals the domestic factory
sector is contracting. "Our guess is that this weakness is at least partly due to
the all-out strike at GM, which began in mid-September," said
Paul Ashworth, chief U.S. economist at Capital Economics in
Toronto.
The United Auto Workers a few weeks ago launched the first
company-wide strike at General Motors Co GM.N in 12 years.
"Nevertheless, it reinforces our belief that despite the
hawkish protestations of some officials in recent days, the
Federal Reserve will still cut interest rates by a further 25
basis points at December's FOMC meeting.
The dollar's outlook remained solid despite Tuesday's weak
data, analysts said.
"Even though the Fed is lowering interest rates, the dollar
is not exactly losing ground because of the domino effect:
everybody is following the Fed in cutting rates," said Juan
Perez, senior currency trader at Tempus Inc in Washington.
"At the this point, with an economy that's growing at 2% on
a quarterly basis while the rest of the world is struggling,
the dollar looks like to be the safer asset."
Elsewhere, the Australian dollar was the main underperformer
in the G10 space on Tuesday after the Reserve Bank of Australia
cut interest rates and expressed concern about job growth
With rate cuts in Australia, final PMI readings in Europe at
seven-year lows and weak confidence readings in Japan, the
dollar scored its biggest quarterly gain in the third quarter
since June 2018.
On Tuesday, a September survey showed euro zone
manufacturing activity had contracted the most in almost seven
years. In afternoon trading, the dollar index .DXY was down
0.2%99.14, after earlier touching 99.58, its highest level since
May 2017.
The euro was up 0.3% against the dollar at $1.0933 EUR= .
In Japan, its big manufacturers' business confidence
worsened to a six-year low in the July-September quarter, the
Bank of Japan's closely-watched Tankan survey showed.
The yen initially weakened after the Tankan data, but firmed
against the dollar after the weak U.S. manufacturing report. The
dollar was last down 0.3% at 107.740 yen JPY= .
Elsewhere, the Australian dollar AUD=D3 fell 0.7% to
US$0.6710 after the RBA cut its cash rate to a record low of
0.75%, as expected.
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Currency bid prices at 3:39PM (1939 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0936 $1.0898 +0.35% -4.65% +1.0942 +1.0880
Dollar/Yen JPY= 107.7000 108.0600 -0.33% -2.32% +108.4600 +107.6400
Euro/Yen EURJPY= 117.79 117.79 +0.00% -6.68% +118.1600 +117.6800
Dollar/Swiss CHF= 0.9927 0.9978 -0.51% +1.15% +1.0016 +0.9927
Sterling/Dollar GBP= 1.2304 1.2287 +0.14% -3.55% +1.2340 +1.2208
Dollar/Canadian CAD= 1.3216 1.3239 -0.17% -3.09% +1.3290 +1.3209
Australian/Doll AUD= 0.6703 0.6749 -0.68% -4.91% +0.6775 +0.6673
Euro/Swiss EURCHF= 1.0859 1.0876 -0.16% -3.51% +1.0920 +1.0858
Euro/Sterling EURGBP= 0.8885 0.8867 +0.20% -1.10% +0.8936 +0.8847
NZ NZD= 0.6243 0.6261 -0.29% -7.06% +0.6272 +0.6204
Dollar/Dollar
Dollar/Norway NOK= 9.1278 9.0935 +0.38% +5.66% +9.1476 +9.0913
Euro/Norway EURNOK= 9.9838 9.9127 +0.72% +0.79% +9.9839 +9.9082
Dollar/Sweden SEK= 9.8736 9.8408 +0.69% +10.15% +9.9303 +9.8405
Euro/Sweden EURSEK= 10.7997 10.7261 +0.69% +5.22% +10.8110 +10.7209
CESI and euro positions https://tmsnrt.rs/2nMxsQe
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