Data boosts euro – and dollar in doldrums

David Hobart
Data boosts euro – and dollar in doldrums

The US dollar continued to find itself in the doldrums on Tuesday and into Wednesday after some positive data about business performance was released in Europe.

The IHS Markit Eurozone purchasing managers’ index went up higher than expected, going from 31.9 in May to 47.5.

While this did not push it into the levels required to declare the Eurozone out of the contraction or recession phase, it was broadly welcomed by traders – who are desperate to see some semblance of normality return to the markets.

The single European currency was spotted riding high in its pair against the greenback at one stage, reaching $1.1321 there.

This rendered June likely to be the currency’s best month in its pair with the greenback since one month in Q4 2019.

The US dollar continued to languish in the doldrums.

The increasing confidence in most places that the coronavirus pandemic is coming to an end is not apparent in the US, where a number of states are continuing to see high levels of outbreaks.

These include states that are highly populous, such as Texas.

The dollar markets also appeared to be rendered cautious by the announcement that SoftBank, a corporation, had begun a huge sale of its stake in T-Mobile – a sale that is believed to be worth tens of billions of US dollars.

Globally, the riskier currencies were also continuing to rise as traders moved wholeheartedly to the view that the coronavirus pandemic’s economic impacts, at least, were potentially coming to an end.

The Aussie dollar, a currency that has had a lot of airtime in recent months as a leading barometer of global attitude to forex risk, was up by 0.3% as trading kicked off on Wednesday.

It was sat at $0.6952 against the greenback.

This came despite the fact that some lockdown restrictions have been brought back into force in the state of Victoria, which contains the major city of Melbourne.

However, there were some complications to the now-common picture of rising risky currencies and faltering safe havens.

The Kiwi dollar in New Zealand was down compared to the previous day, which is not normal in a situation of rising risk sentiment.

It was spotted at $0.6477 against the dollar at one point.

This came after the central bank in the country claimed that there were still some economic challenges facing the country as a result of the pandemic.

While it did reveal that it would not be altering interest rates at the present moment, it did make it clear that it would be willing to pull monetary levers in the future.

Analysts appeared to be sanguine on the whole.

One said that there was scope for the issue of case rises in the US to be explored and dealt with by local governments in the coming weeks – leading to a clearer picture for markets.

He also emphasised that so far, there had been no downward change to consumer choices.

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