Euro Gains Traction on Upbeat Euro Zone Data; U.S. Markets Closed for Thanksgiving

Euro Zone Data

The euro saw a slight upward movement on Thursday, benefiting from indications that the economic downturn in the euro zone might be easing, as reflected in recent data. However, trading activity remained muted due to the Thanksgiving holidays in the U.S. and Japan, resulting in thinner liquidity and some volatility in currency markets.

Preliminary surveys suggested a potentially shallower recession in Germany, a crucial economic powerhouse, offsetting a more pessimistic view of French business activity. The flash Composite Purchasing Managers’ Index (PMI) for November indicated that while the eurozone economy is on track for a contraction in the fourth quarter, there was an improvement compared to previous data.

Michael Brown, a strategist at TraderX, noted that the data revealed things were “getting slightly less bad,” emphasizing a cautious optimism. The PMI for the services industry in the eurozone rose to 48.2 in November, slightly exceeding expectations, but still indicating contraction. Manufacturing activity, however, continued to contract.

The euro, as a result, experienced an uptick against major currencies, reaching $1.09075, up 0.18% on the day. Analysts at Saxo Bank suggested potential resistance around $1.096.

In contrast, the U.S. dollar index fell 0.14%, its first decline since Monday. The dollar had rebounded from 2-1/2-month lows after data revealed a greater-than-expected fall in new jobless claims. Despite this, concerns persisted as a University of Michigan survey indicated consumers anticipating higher inflation in both the near and long term.

Sterling recovered against the dollar after a drop prompted by British Finance Minister Jeremy Hunt’s budget update, which projected lower growth than previously forecast. A separate UK business activity reading showed a marginal return to growth in early November.

Meanwhile, markets showed a restrained reaction to the unexpected victory of anti-EU far-right populist Geert Wilders in the Netherlands’ parliamentary elections.

In cryptocurrencies, Bitcoin fell 1% to $37,047 following the announcement of Binance CEO Changpeng Zhao stepping down and pleading guilty to breaking U.S. anti-money laundering laws as part of a $4 billion settlement. Bitcoin had risen nearly 5% the previous day.

The yen, buoyed by weakness in the dollar and expectations of a potential shift in the Bank of Japan’s monetary policy next year, reached a two-month high of 147.155 on Tuesday.

While U.S. markets were closed for Thanksgiving, global markets navigated through a mix of economic data and geopolitical events, contributing to fluctuations in currency movements.

Featured Image: Freepik @ gar1984

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