European Session – Euro remains below 1.35 after upbeat PMI as ECB comes into focus
February 3, 2014 2:33 pm
The euro was briefly lifted above the key 1.3500 level following Eurozone PMI data today. The final figure for January came in at 54.0 versus a previous estimate of 53.9. Surprisingly better-than-expected readings from France and Germany acted as a catalyst of the move up to a session high of 1.3518, from a 2-month low of 1.3476. The euro was little changed against the dollar during the Europeans session, ending at 1.3494.
The euro came back under pressure flat as what really matters is Eurozone inflation data and how the European Central Bank will deal with the previous week’s soft CPI number. There are concerns of deflation in the region as the inflation rate ( 0.7% in January) is well below the central bank’s 2% target rate. A dovish ECB and will surely bring the euro back down. Even if the ECB does not cut rates, any acknowledgement by ECB Chief Mario Draghi that there are downside risks to inflation will put the single currency back under pressure.
Sterling accelerated its decline against the dollar after UK manufacturing PMI missed forecasts for a print of 57.1 in January, coming in at 56.7, below a prior 57.2.
The pound fell to a 17-day low against the dollar, reaching 1.6322 from a pre-PMI high of 1.6434 and ended the session with a 0.51% loss at 1.6344. Thursday’s Bank of England policy meeting will be a key risk for the pound. Expectations are for the central bank to commit to keeping interest rates lower for longer.
The yen was helped higher by safe haven flows today as risk appetite remains damp as investors remained wary of emerging economies and data from China over the weekend showed factory activity in the region fell in December. A falling Nikkei today also helped support the Japanese currency. The dollar fell back below the key 102.00 level, losing 0.23% against the yen to end the European session at 101.85.
The US ISM manufacturing data to be released in the upcoming US session will be closely watched as this will be an immediate risk for the dollar. Friday’s nonfarm payrolls will be the main focus for the US currency.
The euro was briefly lifted above the key 1.3500 level following Eurozone PMI data today. The final figure for January came in at 54.0 versus a previous estimate of 53.9. Surprisingly better-than-expected readings from France and Germany acted as a catalyst of the move up to a session high of 1.3518, from a 2-month low of 1.3476. The euro was little changed against the dollar during the Europeans session, ending at 1.3494.
The euro came back under pressure flat as what really matters is Eurozone inflation data and how the European Central Bank will deal with the previous week’s soft CPI number. There are concerns of deflation in the region as the inflation rate ( 0.7% in January) is well below the central bank’s 2% target rate. A dovish ECB and will surely bring the euro back down. Even if the ECB does not cut rates, any acknowledgement by ECB Chief Mario Draghi that there are downside risks to inflation will put the single currency back under pressure.
Sterling accelerated its decline against the dollar after UK manufacturing PMI missed forecasts for a print of 57.1 in January, coming in at 56.7, below a prior 57.2.
The pound fell to a 17-day low against the dollar, reaching 1.6322 from a pre-PMI high of 1.6434 and ended the session with a 0.51% loss at 1.6344. Thursday’s Bank of England policy meeting will be a key risk for the pound. Expectations are for the central bank to commit to keeping interest rates lower for longer.
The yen was helped higher by safe haven flows today as risk appetite remains damp as investors remained wary of emerging economies and data from China over the weekend showed factory activity in the region fell in December. A falling Nikkei today also helped support the Japanese currency. The dollar fell back below the key 102.00 level, losing 0.23% against the yen to end the European session at 101.85.
The US ISM manufacturing data to be released in the upcoming US session will be closely watched as this will be an immediate risk for the dollar. Friday’s nonfarm payrolls will be the main focus for the US currency.
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