Forex - U.S. Dollar Gains Momentum on Upbeat Services Data

© Reuters.

Invesing.com – The U.S. dollar rose on Tuesday as better-than-expected non-manufacturing data suggested the economy remained on firm footing.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.31% to 96.98.

ISM nonmanufacturing data for December showed a reading of 55, beating forecasts of 54.5. The services sector is a critical component of the U.S. economy, accounting for roughly 80% of U.S. private-sector gross domestic product (GDP).

The fall in both the euro and pound also underpinned gains in the greenback.

EUR/USD fell 0.43% to $1.1145 shrugging off firmer eurozone retail sales.

The single currency may yet fall furthe if the German government fails to consider increasing fiscal spending to boost its economy, Rabobank warned.

GBP/USD pared earlier gains, falling 0.27% to $1.3133 as Brexit returned to focus with U.K. lawmakers resuming their scrutiny of Prime Minister Boris Johnson's Brexit deal.

Opposition to the government's Brexit deal is expected to be limited as the ruling Conservative party secured a resounding victory in the general election last month.

Brexit aside, signs of U.K. economic growth are needed to underpin the rally in the pound seen since summer last year, MUFG's Fritz Louw said.

USD/JPY rose 0.16% to Y108.53 and USD/CAD rose 0.32%. The loonie was pressured by weaker Canadian economic data and a sharp drop in oil prices as traders reined in bets on supply disruptions in the Middle East despite ongoing U.S.-Iran tensions.