© Reuters.
Investing.com – The US dollar rallied in early European trade on Monday, partially recovering from Friday’s losses in the wake of weaker-than-expected inflation data as a shorter week of the holiday began.
At 02:55 ET (06:55 GMT), the greenback, which measures the greenback against a basket of six other currencies, was trading 0.2% higher at 102.75, after falling 0.4% on Friday.
The dollar is looking for signals from the Fed
The dollar took a hit on Friday in May, suggesting that the year-long cycle of tightening by the Federal Reserve was having some effect.
However, traders were reluctant to push the dollar much lower on Monday, with activity limited ahead of the Independence Day holiday on Tuesday and with plenty of important economic data set to provide more clues as to whether the greenback cycle is likely to resume. Then raise interest rates. Stopped in June.
The main event of the week will be Friday in the US, where economists expect the economy to have added 225,000 jobs in June, a slowdown from May’s addition of 339,000, but still a healthy result.
The Fed is also scheduled to post its June 13-14 meeting when it kept interest rates steady after 10 consecutive rate hikes on Wednesday.
German Manufacturing PMI is set to decline further
It fell 0.2% to 1.0890, ahead of the release of manufacturing PMI data for most of Europe, which is expected to show that this important sector remains in the doldrums.
Germany, the dominant manufacturing base in the eurozone, is expected to show a 41.0 release in June, down from 43.2 in May.
The European Central Bank policymaker is due to speak at a financial conference later on Monday and will no doubt press the case for more to fight even as economic growth slows in the region.
The euro was also under pressure due to the continuing riots in France, the second largest economy in the eurozone, after a police officer killed a teenager in a suburb northwest of Paris.
It fell 0.1% to 1.2688, after rising 5% in the first six months of the year, as traders continued to raise interest rates from Saudi Arabia as the country remained at 8.7% in May, the highest rate of any major developed economy.
Yen when observing interference
It rose 0.3% to 144.75, trading below the psychologically important 145 barrier just after data showed Japanese factory activity contracted in June after expanding for the first time in 7 months in May.
The final for June came in at 49.8, back below the 50.0 threshold that separates growth from contraction, after May’s reading of 50.6.
Japanese Finance Minister Shunichi Suzuki said on Friday that Japan will take appropriate steps in response to the excessive weakness of the Japanese yen, putting traders on alert given Japan’s purchase of the yen in September, its first attempt in the market to strengthen its currency since 1998 around these levels.
Elsewhere, the Risk Sensitivity Index fell 0.3% to 0.6648, while falling to 7.2499 after a private survey showed it grew slightly more than expected in June.