Dollar Slides, Euro Goes Up After PMI Date

 

The dollar fell on Thursday as expectations for further Federal Reserve declines.

The euro gained ground after Eurozone private sector data raised hopes that the bloc’s economy could avert a recession.

The dollar fell 0.2% to 1,1104 euros as of 03:47 AM ET (07:47 GMT)
But reports have shown that Germany’s manufacturing sector remained in recession levels and activity in the services sector slowed.

Against the yen, the dollar slipped 0.15% to 106.44, after a 0.36% gain on Wednesday, its highest since August 13.

Wednesday’s Federation minutes that showed policymakers saw interest rate cuts last month as a revaluation of monetary easing, raising expectations for another rate cut at the central bank’s September meeting.

Investors are now awaiting Fed Speaker Jerome Powell‘s speech at Jackson Hole on Friday for signs of how far the US is.

His comments are of particular interest after a reversal in the Treasury yield curve, highlighting the risk that the US economy may fall into recession.

“The products are dollar supportive for now, but this may not be the last after Powell’s speech,” Junichi Ishikawa said.

“Excess rate discounts are full price. If Powell sounds a little weird, the shares could sell, which would hurt the dollar against safe haven currencies like the yen.”

Federated policymakers were deeply divided over whether to cut interest rates last month, but were united in their desire to signal that they were not on a default path for more cuts.

However, that message is unlikely to hold up well with U.S. President Donald Trump, who has repeatedly based Powell on not aggressively lowering interest rates.

The Fed and other central banks are lowering interest rates to reverse a global economic slowdown caused by a prolonged trade war between the United States and China.

The British pound had a lower impact on the euro during the second day of losses as uncertainty over Britain’s divorce from the European Union weighed in on the clean sheet.

French President Emmanuel Macron said Wednesday there will be no renegotiation of Britain’s conditions for leaving the EU.

German Chancellor Angela Merkel challenged Britain to come up with alternatives to the Irish border background within 30 days of meeting Johnson on Wednesday.
British Prime Minister Boris Johnson is due to meet Macron in Paris on Thursday.

Johnson, who won the premiership a month ago, is betting on the “no-deal” threat of Brexit unrest will convince Merkel and Macron that the EU should get a last-minute deal to lift Ireland back.forex.com

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