Dollar off lows vs. yen after ISM report

The dollar pulled away from session lows against the yen on Monday and hit session highs against the euro after data showed that activity in the U.S. services sector expanded at the fastest rate in five months in July.

During U.S. morning trade, the dollar retreated from session lows against the yen, with USD/JPY down 0.31% to 98.64, after falling as low as 98.28. 

The Institute of Supply Management said its non-manufacturing purchasing manager's index rose to 56.0 in July from a three year low of 52.2 in June.  

Analysts had expected the index to inch up to 53.0 last month.
The increase was largely due to an increase in new orders, with the new orders component of the index rising to 57.7 from 50.8 in June.

The dollar rose to session highs against the euro, with EUR/USD down 0.29% to 1.3240.

Earlier Monday, official data showed that retail sales in the currency bloc fell 0.5% in June and were down 0.9% on a year-over-year basis. The month-on-month decline was the largest since December 2012.

The euro briefly touched session highs earlier after data showed that the euro zone’s services PMI rose to 49.8 in July, from a final reading of 48.3 in June, adding to signs of a recovery in the euro zone.

The dollar remained lower the pound, with GBP/USD up 0.23% to 1.5329 after data showed that the U.K. service sector expanded at the fastest pace in more than six-and-a-half years in July.

The U.K. services PMI rose to 60.2 from 56.9 in June, well above economists’ expectations for a reading of 57.2.

The Swiss franc was lower against the dollar, with USD/CHF climbing 0.26% to 0.9314.

The greenback was mixed against its Australian, New Zealand and Canadian counterparts, with AUD/USD inching up 0.03% to 0.8905,NZD/USD dropping 0.61% to 0.7787 and USD/CAD inching up 0.08% to 1.0401.

The Australian dollar touched three-year lows earlier in the session after official data showing that Australian retail sales were flat in June boosted the likelihood of another rate cut by the central bank. 

Meanwhile, the New Zealand dollar came under heavy selling pressure following reports of milk powder contamination at Fonterra, the world’s largest dairy exporter.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.07% to 82.07.