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Europe, Forex

Euro slides to two-month low on bleak euro zone data; dollar index flat

* Investors expect ECB to signal significant easing * Sterling rises as Boris Johnson appointed UK prime minister * Johnson vows to lead Britain out of EU on Oct. 31 * Mueller testimony has little impact on dollar * Weak U.S. housing, manufacturing data bolster Fed cut view * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds comment, U.S. data, UK’s Johnson speech, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, July 24 (Reuters) – The euro fell to a two-month low against the dollar on Wednesday, weighed down by weak economic data that bolstered expectations that the European Central Bank could undertake aggressive monetary policy easing as soon as this week. The dollar was little changed against a basket of currencies after three straight days of gains, trading in narrow ranges ahead of monetary policy meetings at the ECB on Thursday and the Federal Reserve next week. U.S. data on Wednesday overall were weaker than expected, with manufacturing activity slowing to a near 10-year low in early July. U.S. new home sales rebounded in June, but sales for the prior three months were revised lower. Yasemin Engin, assistant economist at Capital Economics in London, said the U.S. manufacturing data “adds support to the widely-held expectation that the Fed will cut interest rates next week, despite the relative strength of some of the recent hard data.” In the euro zone, money markets are pricing in a 54% chance of a 10-basis-point cut at Thursday’s ECB meeting. The probability rose after the eurozone purchasing managers’ index unexpectedly fell to a three-month low of 51.5 in July from 52.2 in June. Economists polled by Reuters had expected a slight decline to 52.1. The 50 mark separates economic growth from contraction. “Our base case looks for a dovish message overall but nothing further to be delivered at this stage,” said Ned Rumpeltin, European head of FX strategy at TD Securities in London. “A significant dovish shift tomorrow could still push (the euro) lower into a new trading range below $1.11.” In afternoon trading, the euro was down 0.1% at $1.1137 after earlier hitting $1.1128, its lowest since May 30. The euro has shed 2% of its value this month as investors priced in the probability of euro zone borrowing costs falling deeper into negative territory. The dollar was 0.1% lower against the yen at 108.17 yen. Against a basket of currencies, the greenback was little changed at 97.704. The greenback showed little reaction to the testimony of former Special Counsel Robert Mueller to U.S. Congress, who said on Wednesday he had not exonerated President Donald Trump of obstruction of justice. The dollar gained the previous day after Washington reached a deal to lift government borrowing limits, which analysts said could limit the Fed’s appetite for rate cuts. The pound rose slightly from recent lows after Boris Johnson on Tuesday won the contest to be Britain’s next prime minister, focusing investor attention on the prospect of a no-deal Brexit. Sterling was last up 0.4% at $1.2483, not far from the 27-month low of $1.2382 it hit last week. It rallied 0.6% versus the euro, which dropped to 89.16 pence. The pound extended gains after Johnson, in his first speech as prime minister, promised to lead Britain out of the European Union on Oct. 31 with “no ifs or buts” and warned that if the European Union refused to negotiate then there would be a no-deal Brexit. ======================================================== Currency bid prices at 1446 EDT (1846 GMT): Description RIC Last U.S. Pct YTD Pct High Bid Low Bid Close Change Change Previous Session Euro/Dollar EUR= $1.1135 $1.1151 -0.14% -2.91% +1.1158 +1.1128 Dollar/Yen JPY= 108.1800 108.2100 -0.03% -1.89% +108.2700 +107.9500 Euro/Yen EURJPY= 120.47 120.67 -0.17% -4.56% +120.7100 +120.2200 Dollar/Swiss CHF= 0.9857 0.9851 +0.06% +0.44% +0.9874 +0.9837 Sterling/Dollar GBP= 1.2485 1.2436 +0.39% -2.13% +1.2522 +1.2428 Dollar/Canadian CAD= 1.3144 1.3132 +0.09% -3.62% +1.3150 +1.3119 Australian/Doll AUD= 0.6975 0.7004 -0.41% -1.05% +0.7008 +0.6973 ar Euro/Swiss EURCHF= 1.0980 1.0985 -0.05% -2.43% +1.1005 +1.0973 Euro/Sterling EURGBP= 0.8920 0.8962 -0.47% -0.71% +0.8968 +0.8907 NZ NZD= 0.6704 0.6702 +0.03% -0.19% +0.6723 +0.6692 Dollar/Dollar Dollar/Norway NOK= 8.6454 8.6757 -0.35% +0.08% +8.6929 +8.6247 Euro/Norway EURNOK= 9.6270 9.6780 -0.53% -2.82% +9.6874 +9.6157 Dollar/Sweden SEK= 9.4250 9.4679 -0.55% +5.15% +9.4870 +9.4173 Euro/Sweden EURSEK= 10.4989 10.5573 -0.55% +2.29% +10.5743 +10.4967 (Reporting by Gertrude Chavez-Dreyfuss Editing by Sonya Hepinstall)


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