This Wednesday, August 23, the gloomy data of business activity both in the Euro zone as in the United Kingdom had an immediate effect in the euro and the pound sterlingleading them to cede ground against the dollar and propelling the greenback to its level highest in the last two months.
He Purchasing Managers Composite Index (PMI) for the euro area, prepared by S&P Globalexperienced a marked drop to 47 points in August, in contrast to the 48.6 points registered in July. This index marked its lowest point since November 2020.
No less impressive was the services componentwhich plummeted to 48.3 from the previous 50.9. This marked the first time he descended on below the critical mark of 50 so far this year, drawing a clear line between growth and contraction.
the german landscape it was no less dauntingsince the composite data reached its lowest level since May 2020. The decline in manufacturing production was accompanied by a further contraction in the services sector. The consequences of these data were reflected in the weakness of the euror, which reached its lowest point since June 15, with a price of 1.0805 dollars.
niels christensenchief analyst at Nordea, commented on the situation: “The sharp decline in services activity was reflected in a weakening euro. If the slowdown in inflation data continues, there is a possibility that the European Central Bank will suspend its tightening cycle in September“.
The setting was equally challenging for the pound sterling, which fell to its lowest level in more than a week, marking $1.2623. This came after the S&P Global/CIPS PMI plunged to 47.9 in August, a low not seen since January 2021. The survey also revealed an easing in price and cost pressures.
The strength of the dollar became clear after the disclosure of these datadrawing investors’ attention to the upcoming speech from the Federal Reserve Chairman, Jerome Powellat the symposium on jackson hole. This speech is expected to provide crucial clues about the direction of monetary policy.
The dollar index, used to compare the US dollar against six major currencies, hit 103.95, its highest point since June 8. This index registered an increase of 2% during August, about to end two consecutive months of decline.
For his part, The Japanese yen appreciates 0.4%, trading at 145.30 units per dollar, still close to the nine-month milestone reached the previous week, at 146,565 units. These movements left traders in a state of alert, pending any indication of intervention.
Source: Ambito
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