Dollar gains advancing service-sector report

Dollar gains advancing service-sector report

Investing.com – The dollar firmed against most major currencies on Tuesday after data revealed the U.S. service sector was more active in October than anticipated, while soft data out of Europe bolstered the greenback's safe-harbor appeal

In U.S. trading on Tuesday, EUR/USD was down 0.29% at 1.3476.

The euro zone's industrial producer price index slipped 0.9% in September from a year earlier, after dropping 0.8% in August, worse than market calls for a 0.7% contraction.

Industrial producer prices rose 0.1% in September from August, below consensus forecasts for 0.2% expansion.

Disappointing pricing and unemployment reports have a few investors convinced the European Central Bank will either trim interest rates at a policy meeting this week or signal the possibility of such at a later date, which softened the euro and bolstered the dollar's safe-haven appeal.

The European Commission cut its forecast for euro zone growth on Tuesday and said that unemployment in the region remains unacceptably high.

The E.C. said it now expects economic growth of 1.1% in 2014 down from 1.2%, adding growth should rise to 1.7% in 2015.

Meanwhile in the U.S., the Institute of Supply Management said its non-manufacturing purchasing managers' index rose to 55.4 in October from 54.4 in September, beating forecasts for a 54.0 reading, which gave the dollar some support.

Capping the dollar's gains, however, were broad expectations for the Federal Reserve to keep its USD85 billion monthly bond-buying program in place into 2014 in order to spur recovery by pushing down interest rates, which keeps the dollar weak as a side effect.

The greenback was down against the pound, with GBP/USD up 0.49% at 1.6048.

The pound continued to applaud Monday data revealing that the U.K. construction purchasing managers' index rose to 59.4 last month, the highest level since September 2007, from 58.9 in September.�

Analysts were expecting an unchanged reading.

Elsewhere, after data showed that activity in the U.K. services sector expanded at the fastest rate in 16 years in October.

Markit said the U.K. services purchasing managers index rose to 62.8 in October up from 60.3 in September, the sharpest rise in activity since May 1997. Economists had been expecting the index to tick down to 59.8.

The dollar was down slightly against the yen, with USD/JPY down 0.02% at 98.59, and up against the Swiss franc, with USD/CHF up 0.32% at 0.9127.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.34% at 1.0459, AUD/USD down 0.13% at 0.9498 and NZD/USD trading up 0.39% at 0.8316.

Australia's dollar weakened after Reserve Bank of Australia Chairman Glenn Stevens said the Aussie remained "uncomfortably high" and that "a lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy".�

The comments came after the bank left rates on hold at 2.5%.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.17% at 80.79.