The dollar was little changed versus the euro after the U.S. Institute
for Supply Management's factory index rose to 50.2 last month, from
49.6 in May. A reading of 50 is the dividing line between expansion and
contraction. The median forecast of economists surveyed was for a drop
to 48.5. The institute's employment index decreased to 43.7, from 45.5
in May.
``It does cause the market to be a little
optimistic, but I would say such optimism is unwarranted,'' said Todd
Elmer, currency strategist at Citigroup Global Markets in New York.
``The U.S. economy will remain weak for quite some time to come. The
housing market has failed to stabilize. The soft employment component
in the ISM number confirmed the continued deterioration in the labor
market.''
The U.S. currency fell earlier as crude oil
rose as much as 2.4 percent to $143.33 a barrel. The euro-dollar
exchange rate and oil have moved in the same direction 90 percent of
time during the past year, according to calculations based on the
correlation of their value changes.
Former U.S.
Treasury Secretary Robert Rubin said in an interview in Rome that
economic difficulties will last ``quite some time.'' Billionaire
investor Eli Broad, 75, the founder of Los Angeles-based homebuilder KB
Home, said in an interview yesterday that the slowdown in the U.S.
economy is ``worse than any recession we've had since World War II.''
Futures
on the Chicago Board of Trade show a 20 percent chance the Fed will
raise its 2 percent target rate for overnight lending between banks by
a quarter-percentage point on Aug. 5, compared with 38 percent odds a
week ago.
Economists predict the European Central Bank
will increase its 4 percent main refinancing rate by a
quarter-percentage point on July 3, the same day a U.S. government
report will probably show nonfarm payrolls shrank by 60,000 workers
last month, according to separate surveys