Robust eurozone PMI data gives euro a boost

New York

THE euro held on to modest gains on Tuesday after surveys showed eurozone business growth remained robust yet below forecasts, and fears of a trade war with the United States kept the single currency trapped in narrow ranges.

IHS Markit's Eurozone Composite Flash Purchasing Managers' Index (PMI), seen as an indicator of economic health, showed slower growth than expected.

The PMI data was "certainly not strong enough to bring forward the timeline for an eventual rate hike for the European Central Bank (ECB), but also probably not weak enough to push that timeline out any further," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

With the US central bank likely to raise interest rates at least twice more this year and the ECB unlikely to raise interest rates until the second half of 2019, traders remained cautious about the outlook of the euro.

The euro was trading 0.14 per cent higher at US$1.1706 after hitting an intraday low of US$1.1652 in early London trading, Reuters data showed.

The US dollar was 0.23 per cent lower against the euro and five other major currencies as comments last week from US President Donald Trump that criticised the currency's strength continued to weigh on sentiment. The greenback fell 0.26 per cent against the yen to 111.04 yen.

In Turkey, a surprise decision from the central bank to leave interest rates unchanged sent the lira 2.7 per cent lower to 4.866 lira per dollar.

The Turkish currency has lost 30 per cent of its value against the dollar in the past six months.

Risk appetite was mostly firm after Beijing promised to pursue a more "vigorous" fiscal policy, stepping up efforts to support growth.

Both the euro and sterling edged higher against the Swiss franc as investors bet that further policy easing from China would send investors into higher-yielding assets.

Bitcoin, the world's best-known cryptocurrency, gained 6 per cent to surpass US$8,000 on Tuesday on the Bitstamp exchange, its highest since May 22. Ethereum, the second-largest digital currency, gained 5.54 per cent to US$474.22 on Bitstamp.

Reports about the impending approval in the US of a cryptocurrency exchange-traded fund have helped bolster demand in recent days.

Bitcoin has lost more than a third of its value in 2018. REUTERS