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US Dollar Rebounds; Euro Struggles with Weak PMI Data

2 months ago
2 months ago


As the Dollar Rises, Euro is Weighed Down

The U.S. dollar is on the rise, bouncing back from the one-year low it hit last week. Meanwhile, disappointing economic data has put pressure on the euro. Here’s what you need to know:

Dollar Index Climbs

  • At 04:15 ET (08:15 GMT), the Dollar Index traded 0.5% higher to 100.925, just above a 12-month low.
  • The recovery in the dollar comes after a selloff following a hefty rate cut last week.
  • The market seems to have embraced the idea of a soft landing, dismissing concerns of a U.S. recession for now.

    What Investors are Watching

  • Fed futures traders are pricing in 75 bps in rate cuts by the end of the year, and nearly 200 bps in cuts by December 2025.
  • The major economic data release this week is the Fed’s preferred inflation gauge, PCE, due on Friday.
  • Analysts expect a 0.2% month-on-month rise in PCE, with the annual pace reaching 2.7%.

    Euro Hit by PMI Data

  • The euro traded 0.5% lower to 1.1111 after German business activity contracted sharply in September.
  • The PMI fell to 47.2 from 48.4 in August, below the forecast of 48.2.
  • Further signs of economic weakness could lead to another rate cut by the ECB in October.

    Other Currencies in Play

  • The pound fell 0.4% to 1.3264 after reaching its highest level since March 2022 last week.
  • The Bank of England held its key interest rate at 5% on Thursday.

    Yuan Slips after PBOC Cut

  • The yuan traded 0.1% higher to 7.0595, slipping after the PBOC trimmed its 14-day repo rate.
  • The yen fell 0.1% to 143.72, with trading volumes muted due to a Japanese market holiday.

    Market Outlook

  • The U.S. dollar is gaining ground, while the euro faces headwinds from weak economic data.
  • Investors are closely watching central bank actions and economic indicators for future trends.

    In conclusion, the current market dynamics suggest a cautious approach for investors. While the dollar is showing strength, uncertainties in the global economy could lead to volatility in currency markets. Keeping an eye on central bank policies and economic data releases will be crucial for making informed investment decisions in the coming weeks.

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