FX Round-up: Euro tumbles on Greece sell-off
The euro slipped lower against dollar on Monday, shedding marginal gains posted earlier in the session as investors braced themselves for the Greek stock market sell-off.
The Athens Stock Exchange, which commenced trading after a five-week closure during Greece’s wrangles with its creditors, plummeted 23% within minutes of the opening bell. At 1032 BST, a euro was fetching $1.0960 down 0.22%, having risen at one point to $1.0990.
However, the common currency did find support from Eurozone manufacturing sector data, which expanded steadily in July, despite a drastic slowdown in Greece. The final Markit manufacturing Purchasing Managers’ Index came in at 52.4, marginally above the flash estimate of 52.2, but below June’s 14-month high of 52.5.
Meanwhile, the dollar continued to trade higher in Europe, against a basket of major currencies with lower oil and metals prices weighing on commodities-linked one. In the main, the week's big focus will be on US data and the country’s labour market report on Friday in particular.
Kit Jucked, head of forex at Societe Generale, said, “There's a risk that we see edgy markets in the meantime. Last week, we marched front-end US rates slowly higher on the US Federal Reserve Meeting and the GDP data, until they reversed completely on Friday after the release of very soft data on overall employment costs.”
“At the risk of sounding like a broken record, the case for raising rates to less unusually low levels does not rest on wage growth or inflation returning in earnest first.”
However, with oil lower, “USD/CAD is breaking free and is a good risk-reward long at these levels with a 1.3050 stop and a 1.34 initial target”, Juckes concluded.
Elsewhere, the Australian dollar, another commodities-linked currency, was at $0.7285 against the greenback lower by 0.31%, following a downward revision to the China’s Caixin/Markit manufacturing Purchasing Manager’s Index (PMI).
Coming in at 47.8; the index is at its lowest level since July 2013. Finally, the dollar was up 0.24% against the yen at ¥124.19. A data heavy week would also see the Bank of England’s 'Super Thursday' of inflation projections, as well as the central bank's interest rates decision, and the minutes being published on the same day.