U.S. Dollar Falls Amid Prospect Of Fed Rate Cuts

(RTTNews) - The U.S. dollar weakened against other major currencies in the Asian session on Monday, as the disappointing U.S. economic data kept the prospect of interest rate cuts by the Federal Reserve (Fed) intact this year.

Traders reacted to a report showing consumer sentiment in the U.S. deteriorated by much more than expected in February amid a surge by year-ahead inflation expectations.

The University of Michigan said its consumer sentiment index for February was downwardly revised to 64.7 from a preliminary reading of 67.8. Economists had expected the index to be unrevised.

Also, data from the preliminary S&P Global Purchasing Managers Index (PMI) report showed that the U.S. Services PMI contracted to 49.7 from 52.9 in January, falling below the 50 threshold for the first time in 25 months. The economists expected the service sector activity to have expanded at a slightly faster pace to 53.0.

Meanwhile, U.S. President Donald Trump's comments have raised hopes of de-escalation in the trade war between the world's two largest economies. Trump told reporters that a trade deal with China "is possible" in an interview aboard Air Force One.

In the Asian trading today, the U.S. dollar fell to nearly a 3-month low of 148.84 against the yen and a 4-week low of 1.0528 against the euro, from last Friday's closing quotes of 149.29 and 1.0458, respectively. If the greenback extends its downtrend, it is likely to find support around 147.00 against the yen and 1.06 against the euro.

Against the pound and the Swiss franc, the greenback slid to more than 2-month lows of 1.2691 and 0.8954 from last week's closing quotes of 1.2630 and 0.8977, respectively. The greenback may test support near 1.28 against the pound and 0.88 against the franc.

Looking ahead, U.S. Chicago Fed National Activity Index for January and U.S. Dallas Fed Manufacturing Index for February are slated for release in the New York session.