The euro fell to a two-month low against the dollar on Wednesday, hit by weak economic data that bolstered speculation the European Central Bank could undertake aggressive monetary policy easing as soon as this week. The dollar was modestly lower against a basket of currencies after three straight days of gains, generally trading in narrow ranges
ahead of monetary policy meetings at the ECB on Thursday and the Federal Reserve next week. The greenback showed little reaction to the testimony of former US Special Counsel Robert Mueller, who said he had not cleared President Donald Trump of obstruction of justice.
Financial markets are focused on the ECB and Fed policy meetings. Money markets are pricing in a 54% chance of a 10-basis-point cut at Thursday's ECB meeting.
The probability rose after the eurozone purchasing managers' index unexpectedly fell to a three-month low of 51.5 in July from 52.2 in June. Economists polled by Reuters had expected a slight decline to 52.1. The 50 mark separates economic growth from contraction.
In mid-morning trading, the euro was down slightly at $1.1146 after earlier hitting $1.1128, its lowest since May 30. The euro hit a two-year low of $1.1106 in May. Markets betting on ECB easing have lifted the Swiss franc , with the euro slipping 0.1% to 1.0974 francs, not far from the two-year high of 1.0972 reached on Tuesday.
The euro has shed 2% of its value this month as investors priced in the probability of euro zone borrowing costs falling deeper into negative territory.
The dollar was 0.2% lower against the yen at 108.05 yen. Against a basket of currencies, the greenback was down 0.1%. The pound rose slightly from recent lows after Boris Johnson on Tuesday won the contest to be Britain's next prime minister, focusing investor attention on the prospect of a no-deal Brexit.
Sterling was last up 0.3% at $1.2490, not far from the 27-month low of $1.2382 it hit last week. It rallied 0.5% versus the euro, which dropped to 89.23 pence.
Comments
Comments are closed.