Investing.com - The dollar edged higher against the other major currencies on Monday, as markets digested data on Friday showing that U.S. wage growth slowed sharply in the second quarter.
The dollar weakened across the board after official data on Friday showed that the U.S. employment cost index, a measure of workers’ wages and benefits, rose just 0.2% in the second quarter.
It was the smallest quarterly increase since records began in 1982 and was well below economists’ expectations of a 0.6% increase.
The unexpectedly weak data prompted investors to push back expectations on the timing of an initial hike in short term interest rates.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.18% at 97.49.
EUR/USD fell 0.13% to 1.0970 even after data showed that the euro zone's manufacturing sector continued to expand at a steady pace at the start of the third quarter.
Continuing expansion in Germany, Spain and Italy offset a record contraction of the Greek manufacturing sector last month after capital controls were imposed to avert a collapse of the country's financial system.
The dollar rose against the yen, with USD/JPY up 0.26% to 124.17, and slipped lower against the Swiss franc, with USD/CHF down 0.11% to 0.9661.
The dollar received a boost after weak Chinese factory data on Monday added to concerns over a slowdown in the world’s second-largest economy.
The final reading of the Caixin/Markit China manufacturing purchasing managers' index fell to 47.8 in July, the lowest since July 2013, from 49.4 in June. It was the fifth straight month of contraction.
The dollar was higher against the pound, with GBP/USD shedding 0.20% to trade at 1.5596.
In the U.K., data on Monday showed that activity in the manufacturing sector ticked higher last month, but remained relatively subdued.
Research group Markit reported that the U.K. manufacturing PMI ticked up to 51.9 from 51.4 in June, which was the lowest level in over two years. Economists had expected a reading of 51.6.
The Australian dollar was lower, with AUD/USD down 0.26% to 0.7289, while NZD/USD held steady at 0.6594. USD/CAD was up 0.53% to 1.3161.