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FOREX-Dollar retreats after Friday's surge as U.S. data disappoints

Published 05/03/2021, 10:46 PM
Updated 05/03/2021, 10:50 PM
© Reuters.

© Reuters.

* U.S. manufacturing sector slows in April amid supply
challenges
* Ethereum hits record high

(Updates prices, market activity, comments to U.S. market open;
changes dateline, previous LONDON)
By Saqib Iqbal Ahmed and Ritvik Carvalho
NEW YORK, May 3 (Reuters) - The dollar fell against a
basket of currencies on Monday, ceding some of the ground gained
in the previous session, as Treasury yields retreated and
lacklustre data weighed on the U.S. currency
U.S. manufacturing activity grew at a slower pace in April,
likely constrained by shortages of inputs amid pent-up demand
unleashed by rising vaccinations and massive fiscal stimulus.
The dollar index =USD , measuring the greenback against a
basket of six currencies, was 0.4% lower at 90.88, slipping back
towards Thursday's 2-month low despite a boost of 0.7% from
month-end flows on Friday.
"The USD's sharp rally last Friday has blunted the sell-off
in the currency but we are not convinced at this point that a
stronger, broader—corrective— rebound is on the cards," Shaun
Osborne, chief currency strategist at Scotiabank said in a note.
"It would take strong additional gains this week to tilt the
risk towards a recovery in the USD and its early form is not
promising," Osborne said.
Bearish sentiment towards the dollar is on the rise after a
brief pullback. U.S. dollar net short positioning rose this week
to the highest level since late March, according to calculations
by Reuters and Commodity Futures Trading Commission data
released on Friday. The dollar fell against the euro on Monday after a survey
showed euro zone factory activity growth surged to a record high
in April, boosted by burgeoning demand and driving a rise in
hiring, although supply constraints led to an unprecedented rise
in unfulfilled orders. Comments by Luis de Guindos, the European Central Bank's
vice president, also helped the euro. The ECB can start to phase
out emergency stimulus measures when the pace of coronavirus
vaccinations reaches a critical level and the economy picks up
speed, he told an Italian newspaper. Trading in foreign exchange markets was thinned by holidays
in Japan, China and Britain, which kept a lid on volatility.
The Australian and New Zealand dollars were firmer on
Monday, though not enough to completely recoup Friday's losses.
AUD/
FX traders will be looking to labor market data out later
this week to read the health of the U.S. economic recovery and
to gauge how the U.S. Federal Reserve's may respond to improving
data.
Federal Reserve Chair Jerome Powell is due to speak later on
Monday and will be followed by a raft of Fed officials this
week. Central bank policy meetings are also scheduled this week
in Australia, Britain and Norway.
In crypto markets, ethereum broke past $3,000 to post a
fresh record high of $3,203.18. ETH= <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates https://tmsnrt.rs/2RBWI5E
Ethereum hits record high, quadruples in value in 2021 https://tmsnrt.rs/3398mwf
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

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