Investing.com - The euro rose to session highs against the dollar on Monday, extending gains further above the 1.10 level after data showing the U.S. manufacturing sector expanded at the slowest rate in two years in October.
The dollar weakened after the Institute of Supply Management said its manufacturing purchasing managers’ index ticked down to 50.1 in October from 50.2 in September.
Economists had expected the index to decline to 50.0, which is the cut-off point between expansion and contraction.
The employment component of the index fell to 47.6, the lowest level since mid-2009 and dropping below the key 50-mark for the first time since April this year.
EUR/USD rose to highs of 1.1053 from around 1.1032 ahead of the report.
The weak data added to fears that a global economic slowdown is affecting the U.S. economy.
The report came just after the final reading of the Markit U.S. manufacturing PMI, which was revised up to a six-month high of 54.1 from 53.1 in September.
Investors were looking ahead to Fridays U.S. nonfarm payrolls report for indications on the likelihood of a December rate hike.
The Federal Reserve left rates on hold last week but indicated that it could still raise interest rates for the first time since 2006 at its December meeting.
In the euro zone, data on Monday showed that growth in the region’s manufacturing sector ticked higher in October.
The final reading of the euro zone manufacturing PMI rose to 52.3 from 52.0 in September.
The French factory sector posted modest growth with the manufacturing PMI coming in at 50.6 but growth in Germany’s factory sector slid to a three month low, with the factory PMI dipping to 52.1 from 52.3 in September.
The dollar was little changed against the yen, with USD/JPY at 120.60.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.2% to 96.8.