The U.S. dollar strenghened against a basket of major currencies after a report showing less than forecast drop in factory orders in December. Factory orders slipped 1.5 percent in December from a revised of 1.5 percent gain. Analysts had predicted 1.8 percent slide. Worries of slowdown in growth spread yesterday after U.S. ISM manufacturing signaled a cool down in growth to 51.3 in January from 57.0 in December, coming below analysts' forecast of 56.0. Meanwhile, there are fears the deterioration in data would prompt policymakers to decelerate the pace of stimulus cut. Still, the focus is on fundamentals from the world's biggest economy after the Fed decided to slash $20 billion starting from January from its monthly bond purchases to $65 billion . Eyes will focus on the awaited non-farm payrolls due on Friday as it will provide evidence about the health of the labor market. The green currency pared some of the losses incurred on Monday amid expectations the capital outfight in emerging markets would transfer to the U.S. after the Fed stimulus taper and on signs of economic progress. The dollar index, which tracks the dollar's movements versus a basket of major currencies, climbed to a high of 81.29 after hitting a low of 81.07. Against the yen, the dollar rebounded to take the pair up to a peak of 101.47 after opening today at 100.96. The EURUSD retreated amid deflation worries which is raising speculations the ECB would introduce new tools during its meeting on Thursday. The pair is currently trading around 1.3500 after setting a low of 1.3492. The pound resumed its fall for a sixth straight session versus the green currency to touch a low of 1.6255 despite the better than forecast advance in PMI construction for January. Later in the week, investors will focus on the monetary decision by the Bank of England .
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