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Investing.com – USD falls in early European trading on Thursday as traders await release of key business activity survey for clues on global economic health, Nvidia’s impressive earnings lift risk sentiment did.
At 4:10 a.m. ET (9:10 p.m. Japan time), the dollar index against a basket of six other currencies was trading 0.4% lower at 103.472, bringing its decline so far this week to nearly 1%.
Risk sentiment hits dollar
Strong earnings from AI darling Nvidia (NASDAQ:) boosted global confidence, thereby hurting the safe-haven dollar, which benefits from more cyclical currencies.
The dollar has broken off its highs this week, but is still up more than 2% since the start of the year as traders refrained from betting aggressively on the Federal Reserve’s big interest rate cuts this year.
A report from the Fed’s late January meeting released Wednesday showed the central bank is in no hurry to cut rates in the near term. That hawkish stance was reiterated in speeches by several Fed officials this week, with policymakers citing concerns about the persistence of inflation.
Currently, all eyes are on the release of weekly data for February and, more importantly, PMI data as indicators of the underlying strength of the economy.
“Our strategy is for the dollar to hold for the next few weeks, with strong January core PCE on February 29th, followed by weaker employment data and a We expect it to turn lower on the back of softening CPI numbers for the month,” ING analysts said in a note.
Impressions of euro area services PMI
In Europe, the euro was supported by a more positive investment environment, with a 0. It rose 5% to 1.0869.
The latest European PMI data shows that the German economy remains in a difficult situation, but French statistics are starting to show clear improvement.
The news was more positive for the eurozone as a whole, with the index rising to 50.0, the dividing line between expansion and contraction in the eurozone, while rising higher than expected to 48.9.
However, the euro area remained in a difficult situation.
Britain’s PMI data was expected to show strong expansion in the country’s key sectors, trading 0.5% higher at 1.2701.
It rose 0.4% to 31.0335 ahead of the latest meeting, with rates expected to remain unchanged at 45%.
“Looking at the performance of emerging currencies this year, we see the Turkish lira leading the way this year with a total return profit of 3% against the dollar,” ING added.
Yen depreciation continues even after PMI statistics
The currency was little changed at 150.25, above the widely watched 150 level, after weaker-than-expected PMI data weighed on February as economic activity contracted further and growth worsened.
Still, markets remained focused on the Japanese government’s intervention in foreign exchange markets after a minister issued a verbal warning last week.
In Asia, the index edged up slightly to 7.1902 before falling towards the 7.2 level as investors remained skeptical about the country’s economic recovery.
This week, signs of government intervention in the foreign exchange market limited the yuan’s sharp decline.
