* 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 analyst comment, U.S. data, FX table, updates prices, changes dateline, previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 1 (Reuters) - The dollar fell against the euro and the yen on Tuesday after data showed
weakness in the U.S. manufacturing sector and a lower-than-expected rise in construction spending.
Against a basket of six major currencies, the greenback fell from a roughly 2-1/2-year peak hit
earlier in the session to trade little changed on the day.
Data showed the U.S. manufacturing sector contracted in September to its weakest level in more than a
decade as business conditions worsened amid trade tensions between China and the United States.
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.
"The ISM manufacturing data was pretty poor. No matter how much you slice and dice it, it's a pretty
negative report," said Mazen Issa, senior FX strategist at TD Securities in New York.
"Most of the weakness in the dollar has been mostly concentrated against the reserve currencies, so
against the yen and euro," he added.
The dollar was also pressured by a report showing U.S. construction spending barely rose in August, as
the largest increase in private residential investment in nine months was offset by a second straight
monthly decline in outlays on nonresidential projects. That said, the dollar's outlook remained solid despite Tuesday's weak data, analysts said.
"The only concern there is that the ISM report could inspire far more rapid easing from the Federal
Reserve," said TD's Issa. "But even if they do cut, the yield advantage still remains quite high in the
U.S."
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 late morning trading, the dollar index .DXY was little changed at 99.353, after earlier touching
99.58, its highest level since May 2017. The next target for the dollar is the January 2017 high of
103.82.
The euro was up 0.2% against the dollar at $1.0912 EUR= .
The weakness in economic indicators was not confined to Europe. Japanese 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. Against the yen, the dollar fell 0.2% to 107.86 yen JPY= .
Elsewhere, the Australian dollar was the main underperformer in the G10 after the Reserve Bank of
Australia cut interest rates and expressed concern about job growth The Australian dollar AUD=D3 fell 0.9% to $0.6689 after the RBA cut its cash rate to a record low of
0.75%, as expected.
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Currency bid prices at 10:51AM (1451 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0912 $1.0898 +0.13% -4.86% +1.0921 +1.0880
Dollar/Yen JPY= 107.8900 108.0600 -0.16% -2.15% +108.4600 +107.8300
Euro/Yen EURJPY= 117.75 117.79 -0.03% -6.71% +118.1600 +117.6800
Dollar/Swiss CHF= 0.9972 0.9978 -0.06% +1.61% +1.0016 +0.9969
Sterling/Dollar GBP= 1.2233 1.2287 -0.44% -4.11% +1.2313 +1.2208
Dollar/Canadian CAD= 1.3261 1.3239 +0.17% -2.76% +1.3290 +1.3234
Australian/Doll AUD= 0.6689 0.6749 -0.89% -5.11% +0.6775 +0.6673
Euro/Swiss EURCHF= 1.0883 1.0876 +0.06% -3.30% +1.0920 +1.0873
Euro/Sterling EURGBP= 0.8919 0.8867 +0.59% -0.72% +0.8936 +0.8847
NZ NZD= 0.6231 0.6261 -0.48% -7.24% +0.6272 +0.6204
Dollar/Dollar
Dollar/Norway NOK= 9.1302 9.0935 +0.40% +5.69% +9.1476 +9.0913
Euro/Norway EURNOK= 9.9642 9.9127 +0.52% +0.59% +9.9681 +9.9082
Dollar/Sweden SEK= 9.9008 9.8408 +0.75% +10.45% +9.9303 +9.8405
Euro/Sweden EURSEK= 10.8065 10.7261 +0.75% +5.29% +10.8110 +10.7209
CESI and euro positions https://tmsnrt.rs/2nMxsQe
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