© Reuters. Euro surges more than 1% against dollar on Friday Investing.com - The euro jumped more than 1% against the dollar on Friday as...
© Reuters. Euro surges more than 1% against dollar on Friday
Investing.com - The euro jumped more than 1% against the dollar on Friday as growing concerns over slowing global economic growth bolstered expectations that the Federal Reserve may keep interest rates on hold for longer.
The dollar tumbled against the euro and the yen after data showing manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August added to concerns over the outlook for the world’s second-largest economy.
The weak data underlined fears over global growth and added to doubts over whether the U.S. central bank will hike interest rates next month.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
EUR/USD jumped 1.28% to 1.1383 in late trade, and the pair ended the week with gains of 2.55%, the strongest weekly performance since late April.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.
But Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.
Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook and weakness in the global economy could still pose risks to the U.S. economic outlook.
In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 24
Federal Reserve Bank of Atlanta President Dennis Lockhart is to speak; his comments will be closely watched.
Tuesday, August 25
In the euro zone, the Ifo Institute is to report on German business climate.
The U.S. is to release private sector data on consumer confidence and a report on new home sales.
The U.S. is to release private sector data on consumer confidence and a report on new home sales.
Wednesday, August 26
The U.S. is to release data on durable goods orders.
Thursday, August 27
The U.S. is to release revised data on second quarter economic growth, as well as the weekly report on initial jobless claims and pending home sales.
Friday, August 28
In the euro zone, Germany and Spain are to publish preliminary data on consumer price inflation.
The U.S. is to round up the week with data on the goods trade balance, personal income and spending and revised data on consumer sentiment.