(ABM FN-Dow Jones) The euro was trading stable against the dollar towards the end of the morning on Monday, at 1.0770, after the European currency rose sharply on Friday following the publication of the American jobs report, which showed growth of employment was disappointing.
The currency pair briefly moved towards 1.08 on Friday after the jobs report, before falling back to around 1.0765.
According to currency strategists at UniCredit, the dollar’s recovery was prompted by the purchasing managers’ index for the US services sector, which was released on Friday afternoon after the jobs report. Notable was the increase in the price index, from 53.4 to 59.2, which suggests that inflationary pressures persist, according to the Italian bank.
“That probably prevented a sharper decline in the US currency,” UniCredit said.
The euro did not react strongly to the eurozone purchasing managers’ indices on Monday morning, although the services sector in the currency union continued to strengthen in April. The index rose from 51.5 to 53.3. That is the highest level in eleven months.
“This looks very good,” economist Cyrus de la Rubia of Hamburg Commercial Bank said in a statement.
Furthermore, producer prices in the eurozone fell by 0.4 percent on a monthly basis and by 7.8 percent on an annual basis in March. This was mainly explained by lower energy prices. The decrease was less significant than in February.
Investors received $1.2576 for every British pound on Monday morning. The Bank of England will make its interest rate decision later this week. ING only expects a first interest rate cut in August. According to the bank, the BoE will sound optimistic on Thursday, but want to prevent the market from speculating on an interest rate cut in June, especially now that the development of inflation is still uncertain.
Source: ABM Financial News
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