Euro falls, but solid services data hold back losses

By: News Team

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The dollar touches six-week highs due to the strengthening of economies

The euro remained under pressure on Tuesday after data showed euro zone manufacturing activity deteriorated this month as a rebound in the more inflation-sensitive services sector dampened losses.

Over the past two weeks, the euro has suffered especially against the dollar, after strong U.S. jobs data and signs of persisting inflation increased the chances of interest rates rising more than expected.

S&P Global’s composite purchasing managers’ index (PMI) for the euro zone, considered a good indicator of overall economic health, rose to its highest level in nine months.

An index of services sector activity rose to its highest level since June, while the manufacturing sector declined at a sharper pace this month, according to Tuesday’s survey.

The euro was down 0.2 percent against the dollar at $1.0667. So far in February, the euro has lost almost 2% in value against the US currency. But this is something atypical. Against the Japanese yen, it is up 1.4%.

*The Dollar Index It has gained almost 2% so far in February, putting it on track for its biggest monthly gain since September’s 3.2%. It is currently trading around 104, down from Friday’s six-week high of 104.67.

U.S. manufacturing data will be released on Tuesday, while Friday’s core personal consumption expenditures index — the Federal Reserve’s preferred gauge of price pressures — could shed more light on what could happen to interest rates this year.

Against the yen, the dollar rose 0.23 percent to 134.6 yen, while against the Australian dollar it gained 0.4 percent to $0.68875, even after minutes from the Reserve Bank of Australia showed policymakers did not consider pausing hikes at the February meeting.

Sterling was up 0.3 percent against the dollar at $1.2071 and 0.5 percent against the euro at 88.36 pence after data showed British business activity was much healthier than expected in early February.

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