Euro hits one-month high on strong manufacturing growth

The euro climbed to a one-month high against the dollar of $1.1857 on Wednesday after a survey showed strong European manufacturing growth coupled with inflationary pressure from supply-chain snarls.

The euro also touched its highest in a month at 130.44 yen on Wednesday and made a six-week peak of 86.02 pence. It has been further helped by hawkish comments from European Central Bank policymakers about their tapering plans.

Sterling also edged higher on the softer dollar, but found the going heavy into resistance around $1.38. It last sat at $1.3774.

The dollar loitered around multi-week lows on Thursday, pressured by softer-than-expected US labour data as traders awaited a fuller jobs report, which is expected to guide the timing of the Federal Reserve’s pullback in bond buying.

The greenback was also dented by a rising euro, which had climbed to a one-month high of $1.1857 on Wednesday after a survey showed strong European manufacturing growth coupled with inflationary pressure from supply-chain snarls.

“A perceived tilt towards being less dovish by the ECB, and the miss in the ADP print damaged the attempt at a dollar bounce,” analysts at OCBC Bank in Singapore said in a note.

“The ADP miss puts more focus on Friday’s NFP, but note that the ADP has not been a consistent early indicator.”

Ahead on Thursday are US trade figures, U.S. jobless claim figures and eurozone producer prices. However, the week’s major release is the US non-farm payrolls data. Fed chair Jerome Powell said last week that the jobs recovery would determine the timing of the asset purchase tapering.

The dollar has been on the back foot since even before then as doubts about the tapering timeline crept in. The dollar index was steady at 92.517 on Thursday after falling to a four-week low of 92.376 overnight. It has lost almost 1.4 per cent since it hit a nine-month high about two weeks ago.