2020.08.0321:24:00UTC+00Dollar Stays Mostly Higher Against Peers

The U.S. dollar exhibited strength against most of its peers on Monday, bouncing back from recent losses, due largely to some short-covering by traders.

While data showing a stronger-than-expected pace of acceleration in U.S. manufacturing activity supported the greenback's uptick, a report showing a drop in construction spending weighed on the currency.

The Institute for Supply Management's report said its purchasing managers index rose to 54.2 in July from 52.6 in June, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 53.6.

Reflecting decreases in sending on both private and public construction, the Commerce Department released a report on Monday showing U.S. construction spending fell by more than expected in the month of June.

The report said construction spending slid by 0.7% to an annual rate of $1.355 trillion in June after tumbling by 1.7% to a revised rate of $1.365 trillion in May.

Economists had expected construction spending to decrease by 0.5% percent compared to the 2.1% slump originally reported for the previous month.

The bigger than expected drop came as spending on private construction fell by 0.7% to an annual rate of $1.002 trillion in June from the revised May estimate of $1.009 trillion.

The dollar index climbed to 93.99 around mid morning, and despite easing to 93.60 by late afternoon, still remained in positive territory, gaining nearly 0.3% from previous close.

Against the Euro, the dollar was slightly stronger at $1.1768, compared with $1.1780 Friday evening. The euro area manufacturing sector returned to growth in July for the first time in a year-and-a-half as output and demand continued to recover with the further easing of restrictions related to the coronavirus disease, final data from IHS Markit showed.

The Pound Sterling was down marginally at $1.3076, after having slipped to $1.3004 from a high of $1.3113 touched in the Asian session. The UK manufacturing sector expanded the most in more than a year in July as output growth hit a 32-month high due to further loosening of the lockdown conditions in place due to the coronavirus disease, final data from IHS Markit showed.

The IHS Markit/Chartered Institute of Procurement & Supply final manufacturing Purchasing Managers' Index rose to a 16-month high of 53.3 in July from 50.1 in June. However, this was below the flash estimate of 53.6.

The Yen was down 0.1% at 105.95 a dollar, after moving between 105.58 and 106.47 earlier in the day.

Against the Aussie, the dollar firmed up to $0.7124 from $0.7143.

The Swiss franc was weaker by over 0.5% at CHF0.9177, losing ground from previous close of CHF0.9129.

The Loonie was stronger at C$1.3391 a unit of greenback, firming up from C$1.3412, thanks to higher crude oil prices.