Investing.com - The U.S. dollar fell to an almost-two-week low after weak services data, while trade tensions between the U.S. and China prompted a selloff of the Chinese yuan.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.6% to 97.308 by 10:50 AM ET (14:50 GMT).
Growth in the services sector fell to its weakest level since August 2016, with trade worries weighing on business orders, the ISM non-manufacturing survey showed.
The greenback was already weak from tensions with China, as the government asked state-owned companies to stop buying American agricultural goods, Bloomberg reported. The move is in retaliation to U.S. President Donald Trump threatening fresh tariffs on essentially all Chinese goods.
The chances of a 50-basis-point rate cut in September rose on the news, with the odds above 20% compared with 2% at the end of last week. A quarter point cut of at least 25 basis points is already priced in.
The onshore yuan, which is controlled by the Chinese central bank, fell to an 11-year low below 7 to the dollar, indicating the Chinese were not supporting the currency. But it was labeled "currency manipulation" by President Donald Trump in a tweet.
The safe-haven Japanese yen was higher, with USD/JPY falling 0.5% to 106.01.
The euro rose due to the weakness in the greenback, with EUR/USD rising 0.8% to 1.1193. Sterling inched up due to upbeat PMI data earlier in the session, with GBP/USD rising 0.1% to 1.2168.
Elsewhere, USD/CAD fell 0.1% to 1.3194, while USD/MXN jumped 1.5% to 19.5841.