(Reuters) The dollar fell on Tuesday from its highest level in more than two years, undermined by data showing weakness in the U.S. manufacturing sector and a lower-than-expected rise in construction spending.
Against the yen, the dollar slid from two-week highs, as the weak manufacturing report fuelled concerns the United States may be headed for recession.
The greenback’s outlook though remained solid despite Tuesday’s weak data, analysts said.
“Even though the Fed is lowering interest rates, the dollar is not exactly losing ground because of the domino effect: everybody is following the Fed in cutting rates,” said Juan Perez, senior currency trader at Tempus Inc in Washington.
“With an economy that’s growing at 2% on a quarterly basis while the rest of the world is struggling, the dollar looks like to be the safer asset.”