Dollar slips from three-month high; Euro gains after PMIs By Investing.com
Investing.com – The US dollar edged lower on Thursday, but remained near a three-month high supported by expectations of an interest rate cut by the Federal Reserve ahead of the upcoming US presidential election.
At 04:05 ET (08:05 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.2% lower at 104.095, not far from levels last seen at the end of July.
The Beige Book helps the dollar
The dollar was in high demand as the latest economic data indicated that the US economy was holding up well, suggesting that the Federal Reserve may be more aggressive in its easing than previously expected.
The Federal Reserve's, released on Wednesday, said economic activity was little changed since early September, while the labor market continued to show signs of strength.
The unchanged economic outlook comes amid strong economic data released recently, including a strong September jobs report and retail sales.
Markets are currently pricing in a 50 basis point cut for the full year, pointing to a 25 bps cut in November.
Also helping the US currency is the approach to the US presidential election, as investors are also increasing ahead of the election early next month.
“Volatility will rise in the November 5 election,” said ING analysts, in a paper, “and assuming Donald Trump continues to do well in the polls, the dollar should remain a bid.”
Euro gains after PMI data
In Europe, it was up 0.2% to 1.0797, with traders digesting the latest economic activity data from the eurozone region.
The news remained grim, as output fell to 47.3 in October from 48.6 in September, but the PMI provided hope, with the release of the country's aggregate PMI rising to 48.4 in October, from 47.5 last month and -47.6 expected.
While below 50, and thus still in contraction territory, the data pointed to a very important regional economic development.
That said, the number has already cut prices three times this year from record highs, and it looks like it could ease into each of its upcoming meetings this year.
“With inflation and business confidence low, this is fertile ground for ECB doves,” ING said. “We're seeing a bit of something like the 1.0765-1.0850 EUR/USD range at the moment.”
rose 0.3% to 1.2961, bouncing after the pair sank to a five-week low in the previous session, ahead of the release of UK PMI data for October.
Yen finds support
fell 0.4% to 152.19, easing slightly after climbing to a near three-month high in the previous session.
The yen saw some support after Japanese government officials warned of “one-sided” movements in currency markets, given the yen's recent weakness. Their comments have fueled some fears of capital market intervention.
It fell 0.2% to 7.1111, with the yuan recovering slowly from near two-month highs earlier this week, with the focus on the upcoming meeting of China's National People's Congress for further spending cues.
