* U.S. ISM services sector index falls in September
* Dollar drops to 4-week low vs yen, 1-week trough vs euro
* Fed rate cut chances this month rise
* Sterling rallies on hopes of Brexit deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 3 (Reuters) - The dollar fell to a four-week
low against the yen and a one-week trough versus the euro on
Thursday, as investors fretted that weakness in both the U.S.
manufacturing and service sectors signals a slowdown in the
world's largest economy.
Expectations that the United States would continue to
outperform other major economies and put pressure on the Federal
Reserve to slow its interest rate cutting cycle were dampened
this week after weak manufacturing and service sector surveys.
Data on Thursday showed that the Institute for Supply
Management's services sector index fell to 52.6 in September
from 56.4 the previous month. Last month's index was the lowest
in three years amid rising concerns about tariffs. The survey's employment index also slid to 50.4 from 53.1 in
August. September's employment index was the weakest since
February 2014.
The U.S. services data followed Tuesday's U.S. manufacturing
report, which presented a dire picture of the sector, with the
ISM reading falling to its lowest in more than 10 years.
"It is clear the trend with most of the major U.S. data
points are trending lower and it seems slowdown concerns have
been confirmed," said Edward Moya, senior market analyst at
online FX broker OANDA in New York.
"While the service sector is still adding jobs, it is very
apparent that we are no longer adding jobs at a strong pace and
we will likely see further weakness in the service sector have a
strong ripple effect in the coming months."
In afternoon trading, the dollar was down 0.3% against the
yen JPY= , at 106.88 yen, falling to its lowest level in four
weeks at 106.49 right after the ISM non-manufacturing report.
The dollar index fell 0.2% to 98.86 .DXY , with the euro up
0.1% at $1.0969 EUR= . The euro rose to a one-week high of
$1.0999 after the data.
Investors now await Friday's employment report to confirm or
quell recession worries.
Rate futures have factored in another 25 basis-point easing
at the upcoming Federal Reserve policy meeting later this month
following the manufacturing and services data weakness. Chances
of a rate cut jumped to nearly 92.5% on Thursday from 77% on
Wednesday.
"It's increasingly difficult for the hawkish members of the
Fed to argue that what we're seeing is a transitory disruption
in the survey data," said Ranko Berich, head of market analysis
at Monex Europe in London.
The dollar has broadly gained in recent weeks as investors
added long positions on expectations that other major economies,
led by Europe, will underperform the United States. The latest
futures data shows long dollar bets at a 3-month high.
Elsewhere, sterling rallied 0.6% against the dollar to
$1.2365 GBP= after the head of a group of euroskeptic
lawmakers in Prime Minister Boris Johnson's Conservative Party
said on Thursday the government's latest Brexit proposals
offered the possibility of a "tolerable deal." Currency bid prices at 3:15PM (1915 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0968 $1.0958 +0.09% -4.37% +1.0999 +1.0942
Dollar/Yen JPY= 106.8600 107.1700 -0.29% -3.08% +107.2900 +106.4900
Euro/Yen EURJPY= 117.21 117.44 -0.20% -7.14% +117.6400 +117.1000
Dollar/Swiss CHF= 0.9987 0.9967 +0.20% +1.76% +1.0027 +0.9953
Sterling/Dollar GBP= 1.2348 1.2300 +0.39% -3.21% +1.2413 +1.2267
Dollar/Canadian CAD= 1.3329 1.3321 +0.06% -2.26% +1.3347 +1.3310
Australian/Doll AUD= 0.6739 0.6703 +0.54% -4.38% +0.6753 +0.6703
ar
Euro/Swiss EURCHF= 1.0955 1.0923 +0.29% -2.65% +1.0979 +1.0920
Euro/Sterling EURGBP= 0.8881 0.8904 -0.26% -1.14% +0.8921 +0.8848
NZ NZD= 0.6299 0.6267 +0.51% -6.22% +0.6316 +0.6256
Dollar/Dollar
Dollar/Norway NOK= 9.1220 9.1291 -0.08% +5.60% +9.1534 +9.1071
Euro/Norway EURNOK= 10.0084 10.0070 +0.01% +1.03% +10.0391 +9.9931
Dollar/Sweden SEK= 9.8559 9.8706 -0.05% +9.96% +9.9112 +9.8340
Euro/Sweden EURSEK= 10.8129 10.8186 -0.05% +5.35% +10.8461 +10.8050
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
USD and CFTC https://tmsnrt.rs/2nb0ZmB
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>