Forexpros – The dollar was mixed against major world currencies on Wednesday, erasing earlier losses on talk the Federal Reserve will give greater consideration to stimulate the economy via easing measures that weaken the greenback to spur recovery.
Talk that other central banks are mulling intervening as well curbed the greenback’s losses.
In Asian trading on Wednesday, EUR/USD was trading down 0.14% at 1.2590.
Once a bright spot in the U.S. economy earlier this year, the manufacturing sector may be hitting a soft patch.
Earlier this week, the Institute for Supply Management reported that its index of U.S. manufacturing activity fell to 49.7 in June from 53.5 in May.
A reading below 50.0 indicates industry contraction.
June’s figure was the lowest reading since July 2009 and well below analyst forecasts for the index to slip down to 52.0.
Official data softened the blow.
The U.S. government reported that U.S. factory orders increased by a seasonally adjusted 0.7% in May, above expectations for a 0.2% gain.
Still, market talk continued to build the Federal Reserve will roll out a third round of quantitative easing to jolt the economy.
Under quantitative easing, the Fed buys assets from banks, injecting the economy full of liquidity in the process to keep long-term interest rates low to encourage investment and hiring.
Under such a policy, the greenback weakens, yet talk the European Central Bank, the Bank of England and others are considering similar stimulus measures weakened other currencies like the euro, which tempered the greenback’s losses.
In Europe, the eurozone unemployment rate rose to a record high 11.1% in May from 11.0% in April, which further curbed the dollar’s losses.
Meanwhile in China, the HSBC Purchasing Managers’ Index, which focuses on small and medium-sized companies, fell to 48.2 in June from 48.4 in May.
In Australia, the Reserve Bank of Australia left benchmark interest rates unchanged at 3.50%, in line with market expectations.
Retail sales in Australia rose by 0.5% in May, better than expected and above April’s gain of 0.1%.
Analysts were predicting a gain of 0.2%.
The greenback, meanwhile, was up against the pound, with GBP/USD down 0.06% and trading at 1.5678.
The U.S. currency was up against the yen, with USD/JPY trading up 0.16% at 79.66, and up against the Swiss franc, with USD/CHF trading up 0.14% at 0.9540.
The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.09% at 1.0130, AUD/USD up 0.21% at 1.0303 and NZD/USD up 0.18% at 0.8052.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.09% at 81.96.
U.S. markets will be closed on holiday Wednesday.
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