Forex - Dollar lower vs. rivals but downside seen limited

Forexpros - The U.S. dollar remained lower against its major counterparts on Tuesday, as risk appetite was bolstered by a flurry of broadly better-than-expected economic data but the risk rally looked set to be capped by persistent worries over the financial crisis in Europe.

During European afternoon trade, the dollar was lower against the euro, with EUR/USD advancing 0.68% to hit 1.3022.

Official data released earlier showed that the number of unemployed people in Germany fell more-than-expected in December, while the country's jobless rate dropped to a record low.

The report came a day after data indicating a slowdown in the rate of contraction in the manufacturing sector in the euro zone.

But concerns over the risk of sovereign debt downgrades across the euro zone kept the euro under pressure, as investors looked ahead to bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.

The greenback was also lower against the pound, with GBP/USD rising 0.57% to hit 1.5601.

A report earlier showed that manufacturing activity in the U.K. improved in December, but remained in contraction territory for the third consecutive month.

The greenback was lower against the yen and the Swiss franc, with USD/JPY sliding 0.20% to hit 76.73 and USD/CHF shedding 0.42% to hit 0.9357.

In Switzerland, data showed that manufacturing activity increased more-than-expected in December, returning to expansionary territory after contracting in the three previous months.

In addition, the greenback was weaker against its Canadian, Australian and New Zealand cousins, with USD/CAD tumbling 0.70% to hit 1.0116, AUD/USD rallying 1.07% to hit 1.0342 and NZD/USD advancing 1.08% to hit 0.7867.

The Australian dollar was boosted after data on Sunday showed that Chinese manufacturing activity expanded in December after contracting the previous month.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.63% to hit 79.77.

Later in the day, the U.S. Institute of Supply Management was to publish a report on manufacturing activity, while the Federal Reserve was to publish the minutes of its December policy meeting.



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