2024.03.0520:59:00UTC+00Dollar Loses Ground On Weak Economic Data

The U.S. dollar struggled to find support on Tuesday as weaker than expected economic data, including a reading on the nation's services sector activity, raised the possibility of a rate cut in June.

Traders also looked ahead to Federal Reserve Chair Jerome Powell's testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.

A report released by the Institute for Supply Management today showed U.S. service sector growth slowed by slightly more than expected in the month of February.

The ISM said its services PMI fell to 52.6 in February after climbing to 53.4 in January. While a reading above 50 still indicates growth, economists had expected the index to show a more modest decrease to 53.0.

The Commerce Department also released a report showing a steep drop in new orders for U.S. manufactured goods in the month of January.

The Commerce Department's report showed factory orders dropped 3.6% in January after falling by a revised 0.3% in December. Economists had expected factory orders to tumble by 2.9% compared to the 0.2% uptick originally reported for the previous month.

Data on factory orders, private sector employment, weekly jobless claims and the U.S. trade deficit along with the Fed's Beige Book are due later in the week.

The U.S. Labor Department's employment report is due on Friday, with employment expected to increase by 200,000 jobs in February after an increase of 353,000 jobs in January.

The European Central Bank's monetary policy announcement is due on Thursday.

The dollar index dropped to 103.58 after weak economic data, and despite recovering to 103.78, remained below the previous closing level.

Against the Euro, the dollar was down slightly at 1.0858, and against Pound Sterling traded at 1.2706, down 0.11%.

The dollar weakened against the Japanese currency to 150.05 yen, and edged up marginally against the Aussie at 0.6503.

Against Swiss franc, the dollar eased to CHF 0.8835, after having firmed to CHF 0.8868 earlier in the day. The dollar gained against the Loonie, rising to C$ 1.3595 a unit, rising from C$ 1.3575.