RTTNews - The dollar surged to the upside versus the yen but remained under heavy pressure versus other major currencies Monday as the world turned its attention to US auto giant General Motors, which declared Chapter 11 bankruptcy this morning.
The GM news overshadowed a slew of key economic data, including a report on US personal income and spending.
Stocks rallied around the world on Monday, fueling increased risk appetite and further interest in resurgent currencies like the euro and sterling. Rising commodities prices hurt the dollar versus resource-linked counterparts like the loonie and aussie.
The dollar slumped to a fresh 6-month low of 1.6494 versus the sterling, extending its dramatic move away from January's 23-year high of 1.3501. Against the euro, the dollar dropped to a 5-month low of 1.4245, having dropped about 14 cents over the past month.
With crude near $68 barrel for the first time since last year, the dollar continued its downward spiral versus the loonie, slipping to 1.0782. If oil prices continue to re-inflate at this pace, the dollar could hit parity with the loonie by summer's end.
On the flip side, the dollar firmed up against the yen, rebounding to 96.35. The pair has seen choppy trading of late, with traders selling both currencies against other majors due to increased risk appetite.
In economic news, personal income unexpectedly increased in the month of April, according to a report released by the Commerce Department on Monday, although the report also showed a modest decrease in personal spending during the month.
The report showed that personal income increased by 0.5 percent in April following a revised 0.2 percent decrease in March. The increase surprised economists, who had expected income to fall by 0.2 percent compared to the 0.3 percent decrease originally reported for the previous month.
While the Institute for Supply Management released a report on Monday showing that activity in the manufacturing sector contracted for the sixteenth consecutive month in May, the pace of contraction slowed by more than economists had been expecting.
The report showed that the index of activity in the manufacturing sector rose to 42.8 in May from 40.1 in April, with a reading below 50 indicating a contraction. Economists had been expecting the index to edge up to a reading of 42.0.
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