CURRENCIES: Dollar Climbs, Rallying From Last Week's Weakness

By Sara Sjolin and Wallace Witkowski, MarketWatch Features Dow Jones Newswires

Pound slide below $1.30 after disappointing PMI figure

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The dollar strengthened against most of its major rivals on Monday, rallying from sharp losses posted last week as investors paced healthy U.S. economic data and a recent pick up in Treasury yields.

The ICE Dollar Index , which measures the greenback against a basket of six rival currencies, gained 0.6% to 96.218, setting in on track for its biggest one-day rise since May 8, according to FactSet data.

The dollar index last week closed out 2017's second quarter with its worst quarterly loss since September 2010, pressured by hawkish comments from the heads of the European Central Bank and the Bank of England and lingering concerns over President Donald Trump's pro-growth agenda.

See:Dollar bulls have a lot to worry about in second half of 2017 (http://www.marketwatch.com/story/dollar-bulls-have-a-lot-to-worry-about-in-second-half-of-2017-2017-06-29)

"The dollar has been under significant pressure in recent weeks dropping to nine month lows, but could this be about to turn around?," said Richard Perry, analyst at Hantec Markets, in a note.

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"The dollar tends to be well correlated with moves on U.S. Treasury yields and it is interesting that Treasury yields once more seemingly turned a corner, but the dollar is yet to respond," he added.

Upbeat manufacturing readings added to confidence the U.S. economy, putting pressure on government-bond yields, and powering the buck's rise. The Institute for Supply Management said U.S. factory activity picked up in June (http://www.marketwatch.com/story/us-manufacturers-growing-at-fastest-pace-in-three-years-ism-finds-2017-07-03) to 57.8, compared with 54.9% (http://www.marketwatch.com/story/us-manufacturers-growing-at-fastest-pace-in-three-years-ism-finds-2017-07-03). Earlier, data also showed eurozone factories posting their busiest month in more than six years in June, and signs of momentum in Japan and China.

The yield on 10-year U.S. Treasury notes rose 4 basis points to 2.3429% on Monday.

In other currency pairs on Monday, the pound slipped back below the $1.30 handle after the U.K. manufacturing purchasing managers index for June fell short of forecasts and dropped to a three-month low (http://www.marketwatch.com/story/uk-manufacturing-pmi-slows-to-3-month-low-2017-07-03). At last check, sterling bought $1.2955, compared with $1.3024 late Friday in New York.

The euro also declined, fetching $1.1366, compared with $1.1427 on Friday, even as positive economic data was released (http://www.marketwatch.com/story/european-stocks-rebound-from-2-month-low-as-banks-oil-giants-climb-2017-07-03).

"The fact that the euro couldn't rally on good news makes it seem like all the good news from Europe is known," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in an interview.

Against the yen , the dollar was up 0.9% at Yen113.40, compared with Yen112.46 late Friday in New York.

(END) Dow Jones Newswires

July 03, 2017 14:16 ET (18:16 GMT)