NEW YORK: The euro fell against the US dollar on Monday while the greenback fell versus the yen as risk aversion increased after data showing US manufacturing contracted in June for the first time since July 2009.
The data was another sign the US economic recovery is slowing.
"It shows that a long-time bright spot for the economy is in decline and that adds to worries about the fragile state of the US economy," said Joe Manimbo, market analyst at Western Union Business Solutions in Washington. "It can also set the stage for a soft jobs number that will come on Friday."
Uncertainty over the outlook for a deal to stabilize euro zone debt markets also troubled investors. Finland and the Netherlands opposed the use of the euro zone's permanent bailout fund to buy government bonds in the secondary markets.
The dollar was last down 0.36 percent against the yen at 79.48 yen after falling as low as 79.29 yen after the US data. The euro was last at $1.2580, down 0.62 percent, after falling as low as $1.2567 after the US data.
Setting the tone for early trading was the Finnish government's position that the rescue fund's bond buying in secondary markets would require unanimous support from member states. Finland and the Netherlands opposed such a move, casting doubt on prospects for the plan.
Brad Bechtel, managing director at Faros Trading in Stamford, Connecticut, warned the negative news headlines out of Europe are likely to persist, keeping uncertainty levels high and markets jittery. This kind of situation "as always, will make things even worse," he said.
Europe will remain in the spotlight with the European Central Bank expected to ease policy at a meeting this week.
US markets will be closed on Wednesday for the US Independence Day holiday, which may also lower liquidity the day before the ECB meeting.
"The juxtaposition of a holiday-broken week in the US with the amount of economic information we are going to receive this week is making risk-taking extremely dangerous," said Bechtel.
Monday's trading was in sharp contrast to Friday when the euro surged around 1.8 percent against the dollar after leaders agreed to let Europe's rescue fund inject aid directly into stricken banks from next year and intervene on bond markets to support troubled member states.
The single currency fell 1 percent against the yen to 99.98 yen. On Friday, the euro posted its biggest one-day rise against the yen since March 2011. There was talk of profit-taking in the euro against the yen by hedge funds, traders said.-Reuters
The data was another sign the US economic recovery is slowing.
"It shows that a long-time bright spot for the economy is in decline and that adds to worries about the fragile state of the US economy," said Joe Manimbo, market analyst at Western Union Business Solutions in Washington. "It can also set the stage for a soft jobs number that will come on Friday."
Uncertainty over the outlook for a deal to stabilize euro zone debt markets also troubled investors. Finland and the Netherlands opposed the use of the euro zone's permanent bailout fund to buy government bonds in the secondary markets.
The dollar was last down 0.36 percent against the yen at 79.48 yen after falling as low as 79.29 yen after the US data. The euro was last at $1.2580, down 0.62 percent, after falling as low as $1.2567 after the US data.
Setting the tone for early trading was the Finnish government's position that the rescue fund's bond buying in secondary markets would require unanimous support from member states. Finland and the Netherlands opposed such a move, casting doubt on prospects for the plan.
Brad Bechtel, managing director at Faros Trading in Stamford, Connecticut, warned the negative news headlines out of Europe are likely to persist, keeping uncertainty levels high and markets jittery. This kind of situation "as always, will make things even worse," he said.
Europe will remain in the spotlight with the European Central Bank expected to ease policy at a meeting this week.
US markets will be closed on Wednesday for the US Independence Day holiday, which may also lower liquidity the day before the ECB meeting.
"The juxtaposition of a holiday-broken week in the US with the amount of economic information we are going to receive this week is making risk-taking extremely dangerous," said Bechtel.
Monday's trading was in sharp contrast to Friday when the euro surged around 1.8 percent against the dollar after leaders agreed to let Europe's rescue fund inject aid directly into stricken banks from next year and intervene on bond markets to support troubled member states.
The single currency fell 1 percent against the yen to 99.98 yen. On Friday, the euro posted its biggest one-day rise against the yen since March 2011. There was talk of profit-taking in the euro against the yen by hedge funds, traders said.-Reuters
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