Euro hits six-week high on economic, Ukraine optimism, dollar dips
FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
NEW YORK, Dec 3 : The euro hit a six-week high against the dollar on Wednesday, boosted by data showing an expansion in euro zone business activity, while weaker than expected U.S. jobs data and expectations of further U.S. rate cuts weighed on the dollar.
Business activity in the euro zone expanded at its fastest pace in two-and-a-half years in November as a robust service sector more than offset manufacturing weakness.
“There's been this upward creep in good data for Europe, which I think the market is beginning to pay attention to,” said Steve Englander, head, global G10 FX research and North America macro strategy at Standard Chartered Bank’s NY Branch.
Several other European currencies were also stronger on Wednesday, potentially indicating optimism over an end to the Russia-Ukraine war, Englander said. “These are all currencies that would benefit from peace in Ukraine.”
The Kremlin said on Wednesday that President Vladimir Putin accepted some U.S. proposals aimed at ending the war in Ukraine and rejected others but that Russia was ready to meet U.S. negotiators as many times as it took to reach an agreement.
The euro was last up 0.33 per cent at $1.166 and reached $1.1675, the highest since October 20. The Swedish crown strengthened 0.57 per cent versus the dollar to 9.392. The dollar fell 0.54 per cent against the Norwegian krone to 10.06 krone.
The dollar index was down 0.31 per cent to 98.99 and fell to as low as 98.88, the lowest since October 29.
The greenback briefly extended losses against the euro after the ADP employment report showed that U.S. private payrolls unexpectedly declined in November.
Private employment decreased by 32,000 jobs last month. Economists polled by Reuters had forecast an increase of 10,000 jobs.
The U.S. currency has weakened in recent days on speculation that White House economic adviser Kevin Hassett will take over as Federal Reserve Chair after Jerome Powell’s term ends in May.
The Wall Street Journal reported on Tuesday that the Trump administration canceled interviews that were set to begin this week with finalists to be the next Fed Chair, suggesting that Trump has already chosen Powell’s successor.
"(Hassett’s) resume is very strong. The only question is, is he going to be able to be independent of the pressures that are bound to come from the White House?" said Englander.
Trump has repeatedly stated that the Fed is being too slow to cut rates. The new Fed Chair, however, will not themselves be able to sway Fed policy that is decided by a committee.
The Japanese yen strengthened 0.31 per cent against the greenback to 155.37 per dollar.
Sterling strengthened 0.76 per cent to $1.3313.
A survey on Wednesday showed that growth among Britain's services firms declined last month and employment contracted the most since February in the run-up to the government's budget.
In cryptocurrencies, bitcoin gained 1.14 per cent to $92,668. It has rebounded from a seven-month low of $80,553 reached on November 21.
