PMI readings added to the broader market conviction that ECB policymakers will maintain a loose monetary policy for the near future.
Euro zone business activity remained flat at the beginning of the year. ECB rate-setters did not make any policy change on Thursday, standing by their pledge to keep buying bonds and, if needed, cut interest rates until euro zone inflation headed back to their goal.
The data added to expectations that a rate hike is ruled out for the rest of the year.
The euro is set for its worst start to the year in five years, down 1.5% so far this month. The common currency traded at its lowest levels since Dec. 2 at $1.1031.
It was near a five-week low against the British pound and 33-month low against the Swiss franc.
Implied volatility on one-month euro/dollar exchange rates also drifted towards a record low of below 3.7%. This is another indicator of how low expectations are from investors of any change in European policy rates.
In other news, 17 WTO members, including the EU and China, agreed to set up a temporary appeals mechanism to settle trade disputes. This came after the United States paralyzed the WTO’s appeals body.
START TRADINGForex – PMI readings send euro to seven-week lows
The U.S. dollar rose 0.2% at 97.87 and was on track for a third consecutive week of gains.
The Australian dollar traded at $0.6846, erasing the gains made after a strong jobs report the day before. Kiwi headed for a fourth consecutive week of losses.
Britain’s pound retreated on Friday, after initially strengthening. Some investors still expected an interest rate cut next week even though business surveys pointed to a post-election bounce in the UK economy.
Sterling jumped to as high as $1.3180 immediately after the surveys were released before falling back. It was last down 0.2% at $1.3102. It also erased its gains versus the euro. The pound traded flat on the day at 84.27 pence.
Oil slipped below $62 a barrel on Friday and headed for a weekly decline. Concern that the coronavirus in China may spread curbed travel and oil demand.
Global benchmark Brent was down 28 cents to $61.76 by 1302 GMT. The contract is down almost 5% this week, its third consecutive weekly drop. U.S. crude slipped 20 cents to $55.39 and was also on course for a weekly decline.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money