Dollar Loses Ground Against Major Counterparts

(RTTNews) - The dollar shed ground on Monday after the British government decided to abandon its plan to scrap the 45% tax rate, which was announced a few days ago.

The U.K. government's plan to scrap the 45% tax rate came under severe criticism from several quarter, including from the International Monetary Fund (IMF).

The IMF called the U.K.'s unfunded tax cuts "excessive" and said they needed to be revised. "Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy," an IMF spokesperson said in a statement last week. "Furthermore, the nature of the UK measures will likely increase inequality."

In U.S. economic news today, a report from the Institute for Supply Management showed activity in the U.S. manufacturing sector slowed by more than expected in the month of September but still saw continued growth.

The ISM said its manufacturing PMI fell to 50.9 in September from 52.8 in August, although a reading above 50 still indicates growth in the sector. Economists had expected the index to edge down to 52.2.

With the bigger than expected decrease, the manufacturing PMI dropped to its lowest level since hitting 43.5 in May 2020.

A report released by the Commerce Department showed construction spending in the U.S. fell by 0.7 percent to an annual rate of $1.781 trillion in August after sliding by 0.6 percent to a revised rate of $1.794 trillion in July.

Economists had expected construction spending to dip by 0.3 percent compared to the 0.4 percent drop originally reported for the previous month.

The bigger than expected decrease in total construction spending came as spending on private construction decline by 0.6 percent to an annual rate of $1.426 trillion.

The dollar index dropped to 111.47 around late morning, and was last seen hovering around 111.65, down 0.42% from the previous close.

Against the Euro, the dollar weakened to 0.9825 from 0.9802.

The dollar tumbled to 1.1322 against Pound Sterling, dropping nearly 1.4%.

Against the Japanese currency, the dollar eased a bit, fetching 144.57 yen a unit, compared to 144.72 yen on Friday.