NEW YORK (Reuters) – The euro rose to one-week highs after positive economic data on Tuesday, while the Australian dollar and other riskier currencies strengthened after US officials confirmed that the U.S.-China trade deal it remained intact.
FILE PHOTO: The signature of the President of the European Central Bank (ECB), Mario Draghi, is seen on the new 50-euro bill during a presentation by the German Central Bank (Bundesbank) at its headquarters in Frankfurt, Germany, on March 16 . 2017. REUTERS / Kai Pfaffenbach
The euro rebounded after a sign of recovery this month in the recession in the eurozone economy caused by the coronavirus pandemic. The IHS Markit Flash Composite Purchasing Managers Index (PMI), seen as a good indicator of economic health, rebounded to 47.5 from May 31.9, approaching the 50 mark separating growth from contraction. In April it hit a record low of 13.6.
“The story in the G10 is that the eurozone PMIs are above expectations,” said Vassili Serebriakov, currency and macro strategist at UBS in New York. Those economic readings are encouraging “in the sense that growth is recovering a little faster than expected by the markets.”
Investors are weighing better-than-expected economic data against increases in new coronavirus cases in certain areas worldwide.
The greenback had briefly won overnight on the security purchase after White House trade adviser Peter Navarro said the trade deal between the United States and China had “ended.”
Risk sentiment received a boost after Navarro withdrew those comments, saying they were taken out of context. The President of the United States, Donald Trump, later confirmed in a tweet that the agreement with China was “completely intact.”
“We expect new limited consequences, and President Trump is expected to remain committed to the phase one trade deal in the run-up to the election,” said Lee Harman, currency analyst at MUFG.
“However, last night’s price action highlights that the currency market remains sensitive to uncertainty in trade policy. It remains a potential trigger for increased volatility, “he said.
The euro last climbed 0.46% on the day to $ 1.1310, after hitting $ 1.1337, the highest since June 16.
The Australian dollar jumped 0.42% to $ 0.6934, after previously hitting $ 0.6973, also the highest since June 16.
The dollar fell 0.37% against the yen at 106.4700 yen, after hitting 106.06 yen, the weakest since May 7.
The data of EE. USA They showed Tuesday that US business activity. USA It contracted for the fifth consecutive month in June, while sales of new single-family homes in the US USA They increased more than expected in May.
The US macroeconomic reports. USA Better than expected have raised the US economic surprise index. USA It has been at record levels for Citi and has emboldened expectations that a recovery from the depression caused by the coronavirus pandemic will not take as long as some analysts feared.
Additional reports from Olga Cotaga in London; Dan Grebler and Chizu Nomiyama Edition