LONDON, Oct 1: The dollar was steady against other major currencies on Tuesday as investors braced for the release of key US economic data which could confirm signals that US industry is lurching back into recession.

The single European currency edged up to $0.9876 from 0.9867 late on Monday in New York.

The dollar rose to 122.06 yen from 121.70 on Monday.

Analysts said that in light of Monday’s bleak US regional economic survey from the Chicago Purchasing Management Association, all eyes were on the national equivalent due to be released later by the Institute of Supply Management (ISM).

It’s going to be a weak ISM, which may be enough to push the dollar lower against the euro, said 4Cast currency strategist Paul Bednarczyk.

Commerzbank currency strategist Kamal Sharma added that the ISM survey, along with Friday’s US labour market data, would be one of the main pieces of information used by the US Federal Reserve when it sets interet rates at the beginning of November.

Indeed, if this week’s key US data releases are signficiantly below the consensus, then the market’s belief that the Fed may cut intra-meeting will grow further still, Sharma said.

Halifax currency economist Steven Pearson said the slide in the Chicago indicator had raised concerns the US economy was now heading for a double-dip recession.

In this regard the US ISM manufacturing report is key. The market is arguably braced for the worst, with sub-50 readings now widely expected, Pearson said.

Sharma said comments from Fed governor Robert McDonough, who reportedly gave a strong hint Monday that US interest rates were set to fall, had reinforced expectations that a US rate cut is imminent.

But the euro failed to take full advantage of concern at the parlous state of the US economy after figures showed European industry may also be lurching back into recession for the first time since February.

Data released earlier revealed that the headline index of a keenly watched survey of purchasing managers within the euro zone fell to 48.9 in September from 50.8 the previous month.

The euro was changing hands at $0.9876 against 0.9867 late on Monday in New York, 120.58 yen from 120.11, 0.6273 pounds (0.6287) and 1.4575 Swiss francs (1.4546).

The dollar was being quoted at 122.06 yen (121.70) and 1.4756 Swiss francs (1.4743).

The pound was at $1.5746 (1.5683), 192.18 yen (190.94) and 2.3243 Swiss francs (2.3124).

On the London Bullion Market, the price of an ounce of gold slipped to $323.25 from 323.50 late on Monday. —AFP