US Dollar Unable to Find Support From Strong PMI Readings

The US dollar is tumbling to kick off the trading week, despite strong data that should support the greenback. The buck might be continuing its fourth-quarter reversal that saw the currency pare most of its stellar gains from the first nine months of 2019. Investors could be cautious due to swelling US-Iran tensions, which have also somewhat seeped into global financial markets.

On Monday, the IHS Markit composite purchasing managers’ index (PMI) for December was revised higher at 52.7, up from the initial reading of 52.2. It is also up from the November reading of 52.0. This was the best composite PMI number since April as private sector activity accelerated.
The IHS Markit services PMI was also revised higher to 52.8 for December, up from the preliminary estimate of 52.2. It also beats the final reading of 51.6 in November and is the best reading in five months. The better-than-expected reading was driven by stronger employment, new orders, and new foreign business.
On Tuesday, analysts will comb through the Institute for Supply Management (ISM)’s non-manufacturing business activity, prices, employment, and new orders. Additionally, overall factory orders and trade data for November will be in focus.
In addition to data, international investors will keep an eye on US-Iran tensions as the two countries exchange a war of words over the death of Qasem Soleimani. But while the mainstream media is playing up fears that war is about to break out, markets have been a bit calmer. Equities pared steep losses, crude oil posted a modest jump, and precious metals recorded admirable gains.
The US Dollar Index slipped 0.22% to 96.63, from an opening of 96.90, at 17:58 GMT on Monday. The greenback had enjoyed an immense surge in the first three quarters of 2019 before peaking at 97.09 in September. It finished last year up 0.4%, but the dollar has risen 1.05% over the last 12 months.
The USD/CAD currency pair fell 0.25% to 1.2971, from an opening of 1.2991. The EUR/USD climbed 0.27% to 1.1189, from an opening of 1.1190.

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Original from: www.earnforex.com