The dollar edged higher against rival currencies on Wednesday, as it recovered from the previous session’s downbeat U.S. manufacturing data and as expectations for a December rate hike by the Federal Reserve continued to support.
USD/JPY added 0.15% to trade at 123.04.
The dollar had weakened after the Institute of Supply Management reported on Tuesday that its manufacturing PMI fell to a six-year low of 48.6 in November from 50.1 the previous month, confounding expectations for a rise to 50.5.
But speculation that the Fed will raise interest rates at its December meeting continued to lend broad support to the greenback.
Investors were eyeing a string of U.S. economic reports this week, including Friday’s nonfarm payrolls report for further indications on the strength of the economy, as the Fed has said that any decision on interest rates will depend on data.
EUR/USD slipped 0.16% to 1.0616, re-approaching Monday’s seven-month trough of 1.0556.
The euro had found support after positive economic reports boosted optimism over the strength of the economy in the euro area.
Eurostat reported on Tuesday that the euro zone’s unemployment rate fell to 10.7% in October from 10.8% a month earlier. This is the lowest rate recorded in the euro area since January 2012.
In addition, research group Markit said its German manufacturing purchasing managers’ index rose to 52.9 in November from 52.6 the previous month.
Sentiment on the euro remained vulnerable however, as the European Central Bank has been signalling over the past weeks that it is ready to implement additional easing measures in order to boost inflation in the euro zone and support growth.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.10% at 99.97, close to Monday’s eight-month peak of 100.35.