Euro May Shrug Off Soft PMI Data, Looking Ahead to ECB Meeting
- Euro may look past soft PMI data as ECB meeting approaches
- US Dollar continues to suffer amid ‘reach for yield’ dynamics
- Yen, Franc advance as risk aversion hits Asia Pacific markets
January’s flash Eurozone PMI survey roundup headlines the economic calendar in European trading hours. The composite gauge is expected to show the pace of manufacturing- and service-sector growth slowed a bit after hitting the highest in at least three years in December.
Data outcomes from the currency bloc area have deteriorated relative to forecasts recently, opening the door for downside surprises. That may have little lasting impact on the Euro however as traders wait for Thursday’s ECB monetary policy announcement before showing directional commitment.
The US Dollar continued to sink in in Asia Pacific trade. The currency has continued to lose ground despite the swift end of the US government shutdown, undermined by “reach for yield” behavior across financial markets that has capital flows leaving the greenback to position for post-Fed hawkish policy reversals.
The anti-risk Japanese Yen and Swiss Franc traded broadly higher as stocks fell across regional bourses. The deterioration in sentiment familiarly translated into the unwinding of carry trades funded in the two perennially low-yielding currencies. The MSCI AsiaPac equities benchmark shed 0.2 percent.
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** All times listed in GMT. See the full DailyFX economic calendar here.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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