Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Forex - Dollar Pulls Back vs Yen, Euro on PMIs

Published 02/21/2020, 03:29 AM
Updated 02/21/2020, 03:34 AM

By Geoffrey Smith

Investing.com -- The dollar was mixed in early trade in Europe on Friday, coming off recent highs against the yen, euro and sterling but making further gains against emerging currencies.

By 3:30 AM ET (8:30 GMT), the dollar index, which tracks the greenback against a basket of developed currencies, was down 0.2% at 99.56, having hit its highest level in nearly three years on Thursday.

However, that represents only a modest pull-back after a rise of nearly 4% in the weeks since the novel coronavirus outbreak in China started to grab headlines.

USD/JPY, which broke through 112 for the first time since April on Thursday, fell 0.4% to 111.69.

EUR/USD, which hit its lowest in three years earlier this week, rebounded sharply to $1.0820 after both the French and German flash purchasing managers indices for February came out higher than expected. AFS Group analyst Arne Petimezas pointed out that the German numbers were "less stellar under the hood", given renewed weakness in new export orders.

The yen’s snap back has happened despite a further drop in both manufacturing and services PMI.

Paul Donovan, chief economist with UBS Wealth Management in London, warned that PMIs tend to exaggerate actual developments, given the mood swings of survey respondents.

“There is a very good possibility that surveys will reflect the business news cycle more than they reflect reality,” Donovan said in a morning podcast.

Also of note later will be U.K. public sector borrowing figures, the last to be released before the new government’s annual budget in March. The ousting of Treasury chief Sajid Javid, combined with newsflow since then, have increased expectations of a big widening in the fiscal deficit, which would argue against a further interest rate cut from the Bank of England.

The pound was up 0.2% at $1.2908

Overnight, the dollar continued to march higher against Asian currencies, a reflection of expectations that the slowdown in the Chinese economy will hit the likes of Japan, Indonesia and Thailand more than anywhere else.

The dollar also hit its highest in over a year against the Turkish lira, as the country struggles with increasing instability on its southern border with Syria.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.