Image: Reuters Berita 24 English - Thursday, the euro fell across the board because German and French PMI numbers were worse than expected....
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| Image: Reuters |
Berita 24 English - Thursday, the euro fell across the board because German and French PMI numbers were worse than expected. This showed that the economy in the euro zone is struggling to get going, which made traders less likely to bet on big rate hikes from the European Central Bank.
On the other hand, the dollar went up against a group of major currencies as people became less willing to take risks and more people wanted safe U.S. Treasuries as the chances of a recession grew. [US/]
In June, demand for goods made in the euro zone fell at the fastest rate since May 2020, when the coronavirus pandemic was at its worst. The main S&P Global factory Purchasing Managers' Index (PMI) dropped from 54.6 to 52.0, which is a level that hasn't been seen in almost two years.
"The manufacturing/services ratio (PMI) is a good indicator of currencies that tend to move in the same direction as the economy. Compared to the U.S., the ratio has dropped by a lot "In a research note, Mazen Issa, a senior FX strategist, said the same thing.
"This is usually a sign that the U.S. dollar will keep doing well. This could be helped as fears of a recession grow."
After the data came out, money markets expected ECB rate hikes of about 30 basis points (bps) in July, down from 34 bps on Monday. Traders also cut the amount they thought the ECB would raise rates by the end of 2022 from 176 bps on Monday to 161 bps.
S&P Global said on Thursday that the U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, dropped from 53.6 in May to 51.2 in June.
If the number is above 50, it means that the private sector is growing. Its flash composite orders index dropped from 54.9 in May to 47.4 in June, which is the first drop since July 2020.
The euro fell by 0.5% against the dollar, to $1.0509. It dropped below a key level of $1.05 for the third time this week. The euro fell by 1.4% against the Japanese yen, reaching 141.85 yen.
After Federal Reserve Chair Jerome Powell's cautious comments on Wednesday lowered the dollar's value against its rivals, the euro's decline pulled the dollar away from its lows and put the dollar in the black against its rivals.
The dollar index went up by 0.3% to reach 104.48.
The markets have been sure for a long time that the Fed will raise rates by another 75 basis points (bps) in July. However, some analysts think that the ECB and Bank of England will take a slower path to tightening or risk hurting growth.
Fed Chair Jerome Powell said on Wednesday that a recession was "certainly a possibility." This reflects worries in the financial markets that the Fed's rate of tightening will slow down growth.
On Thursday, the Fed's head also spoke in front of the House of Representatives. He said that the Fed is "unconditionally" committed to fighting inflation. [nL1N2YA1RT]
Jonathan Petersen, a markets economist at Capital Economics, said, "We think that global factors will become more important in making the dollar stronger in the future. This is in line with signs that economic growth is slowing in the face of aggressive monetary tightening by the Fed and most other major central banks."
Since the beginning of the year, when there was a lot of trouble in Ukraine and the S&P 500 fell by 20%, the dollar index has gone up by more than 9%.
The dollar fell against the yen by 0.9% to 134.94 yen, moving further away from a 24-year high reached earlier this week.
Last week, fewer Americans filed new claims for unemployment benefits, according to data from the U.S. The labour market is still tight, but there are signs of a slowdown.
The number of new jobless claims in the U.S. dropped to 229,000 for the week ending June 18. Since they fell to a more than 53-year low of 166,000 in March, claims have stayed about the same.
After the U.S. news, the dollar index fell for a short time.
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Bid prices for currencies at 2:56 p.m. (1856 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index 104.4200 104.2200 +0.21% 9.154% +104.7800 +104.0500
Euro/Dollar $1.0519 $1.0569 -0.47% -7.47% +$1.0581 +$1.0484
Dollar/Yen 134.9550 136.2100 -0.92% +17.23% +136.2000 +134.2650
Euro/Yen 141.95 143.94 -1.38% +8.92% +143.9800 +141.4200
Dollar/Swiss 0.9612 0.9617 -0.03% +5.40% +0.9678 +0.9568
Sterling/Dollar $1.2249 $1.2265 -0.11% -9.41% +$1.2294 +$1.2171
Dollar/Canadian 1.3003 1.2947 +0.43% +2.84% +1.3017 +1.2937
Aussie/Dollar $0.6889 $0.6924 -0.51% -5.23% +$0.6928 +$0.6870
Euro/Swiss 1.0109 1.0159 -0.49% -2.51% +1.0165 +1.0069
Euro/Sterling 0.8585 0.8615 -0.35% +2.20% +0.8641 +0.8575
NZ $0.6274 $0.6286 -0.23% -8.38% +$0.6310 +$0.6249
Dollar/Dollar
Dollar/Norway 9.9780 9.9045 +0.87% +13.41% +10.0200 +9.8980
Euro/Norway 10.4972 10.4694 +0.27% +4.84% +10.5295 +10.4415
Dollar/Sweden 10.1863 10.0944 +0.43% +12.96% +10.2107 +10.0812
Euro/Sweden 10.7156 10.6697 +0.43% +4.71% +10.7297 +10.6605
