Forex Market Review – EURUSD hits 1-month high; pound tumbles on weak PMI

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Euro climbed to a four-week high against a broadly weaker dollar in thin European trading, as most markets were closed for the May Day public holiday. The dollar is under pressure following  weaker-than-expected U.S. economic data from Monday. EURUSD peaked at a session high of 1.3277, the highest since April 3. Gains for the euro are expected to be limited ahead of the European Central Bank meeting on Thursday and weekend elections in Greece and France.

 

Sterling eased off an eight-month high against the dollar after being dragged down by weaker than expected UK manufacturing PMI data today. The data highlighted the fragility of the UK economy which has entered into recession.  GBPUSD fell to a session low of 1.6190, compared to Monday’s high of 1.6300.

 

Swiss franc rose to four-week highs against a broadly weaker dollar   USDCHF fell to 0.9044, down 0.2 percent on the day. The dollar has been falling against the franc since mid-April, losing 0.9 percent since then, weighed down by speculation of further easing by the Federal Reserve.

 

Yen remains firm against the dollar due to safe haven demand after the greenback was knocked down by weak US data on Monday. The dollar could be under more pressure depending on ISM manufacturing data later today as well as the non-farm payrolls report on Friday. USDJPY fell to a fresh two-month low of 79.63 in early European trading before retracing to 79.89.

 

The Australian dollar fell sharply after the Reserve Bank of Australia cut interest rates by more than expected with a 50 basis-point reduction to 3.75 percent, amid disappointing growth. AUDUSD tumbled to 1.0303 in the European session, down 1.2 percent on the day.