Euro Steady as Market Waits for Stabilization Signs in PMIs
The euro is trading sideways against the dollar early Thursday in Europe, awaiting what are likely to be market-moving business surveys from around the region.
Preliminary purchasing managers’ indexes from IHS Markit are due at staggered intervals, with the euro zone manufacturing and composite PMIs due at 04:00 AM ET (0800 GMT).
Economists are forecasting that the manufacturing PMI will stabilize after sliding from over 60 at the start of 2018 to below 48 in March, well in contraction territory. The consensus estimate is for an uptick to 47.9 from 47.5. The main risk to that forecast appears still to be in Germany: the Current Conditions of the ZEW economic sentiment index continued to decline this month, despite an upturn in expectations.
At 04:00 AM ET (0800 GMT), the euro was at $1.1298, little changed from a day earlier.
The dollar index, which measures the greenback against a basket of six major currencies, was at 96.672, also showing no sign of breaking out of the narrow range it has been in since the end of March. Sterling remained trapped around $1.3044.
The dollar has struggled for direction overnight although it rose 0.5% against the Korean won after the announcement of a new weapons test from North Korea, the first since the breakdown of talks with the U.S. last year.
The Indonesian rupiah, however, hit a six-week high after the confirmation of President Joko Widodo’s re-election, while the Aussie is again testing a new two-month high after a strong labor market report.
The Turkish lira is coming under fresh pressure after a Financial Times report alleging that the central bank has been using accounting tricks to make its foreign reserves look higher than they actually are. The FT said the central bank’s use of currency swaps meant that net foreign reserves are less than $16 billion, rather than the $28 billion officially reported last week.
News that China and the U.S. are aiming for a summit to seal a trade deal at the end of May had little impact, given the lack of accompanying detail.