The euro pulled off 8-month lows against the dollar on Thursday after the bloc’s private sector expanded at its fastest rate in three months in July, and emerging equities hovered near 17-month highs after strong Chinese data.
European stocks edged up too after digesting Markit’s Composite Purchasing Managers’ Index (PMI) of companies across the euro zone and a good early indicator of overall growth. The overall index rose to 54.0 in July from 52.8, its highest since April. Any number above 50 indicates expansion.
The services sector across the 18-member bloc performed better than any of the 39 economists polled by Reuters had forecast, while manufacturers also reported a stronger month than suggested by the median Reuters forecast
“The activity data offsets some of the weakness we saw last month and that has helped the euro,” said Geoff Yu, currency strategist at UBS.
“But there are concerns about domestic growth in the euro zone and possible sanctions on Russia are likely to have an impact.”
The euro EUR= hit the day’s highs at $1.3471, pulling off eight-month lows, while the dollar index .DXY dropped from an earlier six-week peak. Against the yen, the U.S. dollar idled at 101.49 JPY=.
EU states will meet later on Thursday to discuss harsher measures against Russia for its continued involvement in Ukraine and support for pro-Moscow rebels whom Kiev accuses of shooting down a Malaysian Airlines plane last week, killing 298.
European stocks .FTEU3 rose 0.2 percent, reversing earlier losses on mixed earnings data and relatively weak manufacturing data from France, the euro zone’s second largest economy.
Benchmark emerging market stocks .MSCIEF, however, hovered near the previous session’s 17-month highs.
The HSBC flash PMI for China, the world’s second-largest economy, came in at 52.0 for July, well above forecasts and the highest reading in 18 months. There was also good news on the outlook, with a sub-index of new orders reaching 53.7. ECONCN