Euro pushes higher on improved eurozone economic data

[NEW YORK] The euro pushed higher against the dollar and yen on Tuesday on fresh signs of improvement in the eurozone economy that raised doubts about the ECB expanding its stimulus.

A day after hitting a seven-month low against the greenback, the euro pushed up to US$1.0634, a 0.6 per cent gain that came after Markit Economics's purchasing managers index for manufacturing in the eurozone rose to 52.8, beating expectations.

And eurozone unemployment hit its lowest level for nearly four years in October, falling to 10.7 per cent from 10.8 per cent in September.

The two surprise gains raised doubts about whether the European Central Bank will boost its stimulus operations in Thursday's policy meeting.

Persistent economic weakness has underpinned assumptions for two months that the ECB will expand its quantitative easing in the December policy review.

"Good news may dissuade (ECB chief) Mario Draghi from pulling the trigger on more ECB QE, hopes of which have caused the eurozone indices to climb of late," said Connor Campbell at traders Spreadex.

But Jennifer McKeown, senior European economist at Capital Economics, said the new data did not change the outlook that much, especially given ongoing deflationary pressures.

"The bigger picture is that unemployment remains too high to boost wage growth and inflation," she said.

"Accordingly, the ECB is very unlikely to be deterred from announcing stronger policy support on Thursday."

AFP