As the new rise in coronavirus cases is the biggest threat to the recovering economy from the recession PMI data would throw light on the pace.
Positive U.S. economic data and concerns about the second wave of coronavirus infections in Europe met weak economic indicators.
Data in Europe showed eurozone business growth ground to a halt in September. The renewed downturn concerns the dominant services sector, which is likely to be hit harder by new constraints on activity.
IHS Markit’s flash Purchasing Managers’ Index sank to 50.1 in September from August’s 51.9. The flash PMI for the eurozone service industry plummeted to 47.6 from 50.5. Manufacturers fared much better, with the factory PMI climbing to a just over two-year high of 53.7 from 51.7.
The European Central Bank has already planned measures to support the economy. Also, there is a historic 750-billion-euro recovery fund from the European Union due to kick in next year. But a return to where the economy was before the outbreak is not expected until at least end-2022.
Separate flash PMIs showed Germany’s private sector continued to recover this month but more slowly than expected. In France, the euro zone’s second-biggest economy, activity slowed to a four-month low with services weaker than expected.
In Britain, recovery from the coronavirus lockdown also lost momentum, a business survey showed. Further, the British government defended its new, stricter measures against criticism that they did not go far enough. The government said it was trying to balance supporting the economy while protecting health.
Canada’s Prime Minister Trudeau will unveil on Wednesday what he says is a far-reaching plan to help the economy recover from the pandemic.
START TRADINGForex – PMI data cast doubt on the economic recovery
Now, all eyes will be on flash PMI data of a survey on U.S. business activity due later in the day. In any case, experts believe that a swift V-shaped recovery from now on was unlikely.
The dollar index rose to a high of 94.25, the highest in two months, then limited its gains to around 94. The greenback may probably continue to gain as the coronavirus rattles sentiment in Europe.
The US dollar was stable against the Swiss franc at 0.9203 after a 0.6% gain from Tuesday.
The New Zealand dollar lost 0.56% to $0.6597. The Reserve Bank of New Zealand held its policy rate at 0.25% but warned of job losses and business closures.
The Australian dollar fell to a six-week low of $0.7116.
Traders in the pound and the euro are also worried that Britain and the European Union will fail to agree on a free trade deal.
The euro fell to a two-month low of $1.1671 in early morning trading, its lowest since July 27. Then the common currency recouped some losses and was stable against the dollar at 1107 GMT.
The pound fell to $1.2692, its lowest since late July. British Prime Minister Boris Johnson introduced on Tuesday new restrictions on business activity to combat a second wave of the coronavirus.
Sterling has its worst month in four years. New coronavirus lockdown measures, the risk of a no-deal Brexit and talk of negative rates weigh on the currency.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money