Euro buoyant on improved economic views, awaits euro zone PMI
The euro was buoyant on Thursday after more evidence of strength in China improved the outlook for the global economy, with the market looking next to European indicators to provide the currency with a further boost.
The euro was a shade higher at $1.1298, having eked out a gain of 0.1 percent the previous day.
The single currency has steadily recovered from a recent low of $1.1183 plumbed at the start of April.
The euro was lifted after data on Wednesday showed China’s economy grew at a steady 6.4 percent pace in the first quarter, defying expectations for a further slowdown, as industrial production surged and consumer demand showed signs of improvement.
“A recovering Chinese economy is also good news for the German economy, and thus positive for the euro. The ongoing surge in bund yields amid ‘risk on’ is a key factor supporting the euro,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
The 10-year German bund yield rose to a one-month high of 0.10 percent overnight, in a sharp rebound from a 2-1/2-year low of minus 0.094 percent set at the end of March.
Bond yields had sunk in March as concerns about slowing global growth gripped the broader market. Investors are now watching Chinese and European economic data for signs that the global economy is performing better than initially feared.
The Purchasing Managers Indexes (PMIs) for the manufacturing and service sectors in Europe due later on Thursday will provide the next indication of strength for the European economy.
“Data from China cleared the way for the euro, which needs follow through support in the form of strong euro zone indicators,” Ishikawa at IG Securities said.
The dollar index against a basket of six major currencies was flat at 97.015 after dipping 0.05 percent the previous day.
The U.S. currency was steady at 112.035 yen after briefly touching a four-month peak of 112.17 on Wednesday amid a bounce in U.S. Treasury yields to a one-month high.
Commodity-linked currencies sagged after a surge in crude oil prices ran out of steam.
The Canadian dollar stood at C$1.3352 per dollar, having pulled back from a one-month high of C$1.3275 brushed on Wednesday.
The Australian dollar was down 0.1 percent at $0.7173 after popping up to a two-month peak of $0.7206 the previous day in response to the stronger-than-expected Chinese economic growth data.