Euro falls on weak economic data, dollar up thanks to ‎monetary tightening

Euro declined today, Friday, after data indicating stagnation in the growth of business activities in the single currency area this month, while the dollar received support from a tendency to avoid risk and statements indicating continued monetary tightening from global central banks, including the Federal Reserve (US Central Bank).

According to Reuters, the dollar index, which measures the performance of the US currency against a basket of six currencies, rose 0.56 percent, recording 102.95, erasing losses recorded for three consecutive weeks. The euro fell 0.85 percent to $1.0859 and was on track to record its biggest daily loss since March.

The latest data showed that business growth in the euro area almost faltered in June, a contraction deepened in the manufacturing sector, and activities in the main services sector in the region barely grew, with a general decline in demand for the first time since January.

The pound sterling struggled to maintain gains made thanks to the Bank of England’s decision on Thursday to raise the interest rate by 50 basis points, in a move that exceeded expectations, to counter persistent inflation, which fueled fears in Britain of a recession.

High interest rates usually provide support for currencies, but the risk that they will lead to an economic downturn prompted some investors to search for assets that represent safe havens such as the dollar.

Sterling fell in the latest trading 0.31 percent to $ 1.2710 and is heading for a weekly loss of nearly one percent after gains for three consecutive weeks.

The Australian and New Zealand dollars also suffered in Asian trading, with the decline in risk appetite

The Australian dollar fell 1% to $0.6688 and is on track for a weekly loss of more than 2.5%, the worst weekly performance since March. The New Zealand dollar fell 0.58 percent to 0.6141 US dollars, and lost about 1.5 percent during the week.

Federal Reserve Chairman Jerome Powell said on Thursday that the US central bank will move interest rates again, albeit at a “cautious pace”.

Financial markets expect by 74 percent that the US Central Bank will raise interest rates by 25 basis points at the monetary policy meeting next month, after leaving them unchanged at the previous meeting.

Yen was largely stable at 143.05, hovering near a more than seven-month low of 143.23 against the dollar, which it hit in the previous session.

The Japanese currency is under increasing pressure, with the Japanese central bank sticking to its ultra-easy monetary policy

Markets in China are closed for the holiday on Friday