The safe haven US dollar slid to fresh 14-month lows against the euro after relatively firm Chinese manufacturing data kept overnight headlines positive, and before US unemployment data today that is expected to keep the Federal Reserve firmly locked its long-term plan to stimulate the US economy through dollar-negative asset purchases.
The euro also produced another record-breaking session against the yen, hitting 2½-year highs as the Japanese government continues to promote its unlimited monetary easing strategy which stands in stark contrast to the European Central Bank’s recent update on monetary policy.
Sterling is struggling to resist an advancing single currency this morning but further gains yesterday against the US dollar come at timely point for the pound in front of today’s UK manufacturing PMI survey. The index of business activity could give investors an indication of what to expect from next week’s key services PMI; data that could significantly weaken or bolster speculation about a potential triple-dip economic recession in Britain.
Investors will also study unemployment and inflation reports from the euro zone this morning which may persuade some in the market to take profit on the single currency’s impressive gains. However, the euro has dragged its strong overnight performance into today’s European session and could add to those gains if this afternoon’s US unemployment figures point towards another year of US quantitative easing.
