Dollar pushes higher on doubts about economic recovery as investors weigh conflicting signals

Dollar advances on doubts about economic recovery

NEW YORK — The dollar advanced against the euro and the pound Monday as investors moved into the haven of the U.S. currency on doubts about the global economy.

A private trade group’s gauge of the U.S. services economy — from retailers and restaurants to real estate brokers — contracted less than expected in June in its best showing since before the financial crisis struck last fall.

The relatively good showing, however, wasn’t enough to assuage growing concerns about the economy that worsened last week on disappointing reports on consumer confidence and deep job cuts for June.

In late New York trading Monday, the 16-nation euro slipped to $1.3960 from $1.3979 late Friday, while the British pound fell to $1.6254 from $1.6333.

The dollar edged down to 95.29 Japanese yen from 95.99 yen.

The Institute for Supply Management’s services index rose to 47 in June from 44 in May, beating the expectation of 45.5 from economists polled by Thomson Reuters.

Any reading below 50 indicates the services sector is shrinking, and June marked the ninth straight month of contraction. Still, it was the best showing since September when the index was at 50.

Last week, payroll data out of the U.S. showed employers there slashed 467,000 jobs in June — 100,000 more than anticipated. It was the first increase in monthly job losses since January.

“The dollar has found itself pushed further back into favor,” said James Hughes, a currency analyst at CMC Markets. “Those shocking U.S. payroll figures on Thursday are fueling a demand for safe havens.”

Meanwhile, oil prices tumbled to a five-week low Monday on growing evidence of an extended recession that could sap energy demand for some time.

Oil prices had been rising for months on the belief that the economy would improve by the end of the year. Prices had also been pushed higher by the weak U.S. currency.

Benchmark crude for August delivery fell $2.68 to settle at $64.05 a barrel on the New York Mercantile Exchange.

Also last week, the European Central Bank kept its main interest rate unchanged. The euro zone’s 1 percent rate is among the highest of the major economies, most of whom have slashed rates to record lows in attempts to spark lending.

Cutting interest rates can undermine a currency as investors seek out better returns elsewhere.

Both the Bank of England and the Reserve Bank of Australia are expected to keep interest rates unchanged this week. Meanwhile, British Prime Minister Gordon Brown is expected to argue at this week’s G8 meeting that ongoing constrained bank lending, rising oil prices and increased protectionism are posing threats to any economic recovery.

In other late trading, the dollar was slightly lower at 1.0863 Swiss francs compared with 1.0867 francs it bought late Friday, and slipped to 1.1621 Canadian dollars from 1.1624.