The dollar was generally weaker versus other major currencies on Monday, following the release of disappointing news on the U.S. manufacturing sector.
Markets remained focused on Europe, where French President Nicolas Sarkozy and German Chancellor Angela Merkel pledged to fight for a new euro zone treaty with greater fiscal unity among member states.
In Italy, Prime Minister Mario Monti unveiled deep austerity measures and tax increases over the weekend.
Markets were please with the progress in Europe, helping stocks extend their recent gains. Rising risk appetite gave the euro a lift.
The dollar was stuck near $1.3450 versus the euro, having bounced back and forth around that mark for the past few weeks.
Early losses took the dollar to $1.5720 versus the Sterling, but the buck was able to steady near $.15660 later in the day.
The dollar trimmed last week’s gains versus the yen, sliding back to Y77.80 from above Y78.
Activity in the U.S. service sector unexpectedly expanded at a slower pace in the month of November, according to a report released by the Institute for Supply Management on Monday, with the index of activity in the sector falling to its lowest level in almost two years.
The ISM said its non-manufacturing index fell to 52.0 in November from 52.9 in October, although a reading above 50 indicates continued growth in the sector. The decrease came as a surprise to economists.
New orders for U.S. manufactured goods decreased by more than expected in October, according to figures released Monday by the Commerce Department.
Factory orders came in at $450 billion for the month, representing a 0.4 percent drop from September levels. Most economists had predicted a somewhat less severe 0.3 percent decline in new factory orders.
Traders shrugged off remarks from the Federal Reserve’s most vocal dove.
Policy makers cannout be “excessively complacent while the economy is in such dire shape,” said Chicago Federal Reserve President Charles Evans. “It is imperative to undertake action now.”