The dollar is adding to its recent strength at the end of the trading week, after the Chinese central bank announced an unexpected interest rate cut. The move comes just a day after the European Central Bank hinted that further stimulus is coming in December.
China’s central bank unexpectedly lowered interest rates and reserve ratio on Friday, in what could be the latest stimulus effort to underpin the economy that is adjusting itself to the ‘new normal’ of lower growth. The People’s Bank of China cut the one-year lending rate and deposit rate by a quarter-point to 4.35 percent and 1.50 percent, respectively. The latest reduction was the sixth since November last year.
The dollar has broken out to a 2-month high of $1.10 against the Euro Friday, from around $1.11 this morning.
Eurozone’s private sector grew at the fastest pace in two months during October, led by stronger service sector expansion, yet the surprise improvement is unlikely to cause any change in the European Central Bank’s possible plans to boost stimulus in December, as strongly hinted by Mario Draghi a day earlier.
The flash composite purchasing managers’ index that represents both manufacturing and services rose to a two-month high of 54.0 from 53.6 in September. Economists had expected a score of 53.4.
Germany’s factory sector growth slowed more-than-expected in October, while services activity unexpectedly revealed strong growth that was the fastest in seven months, preliminary data from a Markit Economics survey showed Friday.
The flash purchasing managers’ index for the manufacturing sector fell to a five-month low of 51.6 from 52.3 in September. The reading was expected to ease to 51.7.
The total value of new orders received by the German construction industry increased in August, figures from Destatis showed Friday. Orders in the main construction industry climbed a seasonally and working-day-adjusted 0.4 percent month-over-month in August.
France’s private sector expanded at the fastest pace in four months during October, as services activity improved more than manufacturing, preliminary data from a Markit Economics survey showed Friday.
The flash purchasing managers’ index for the services sector rose to 52.3 from 51.9 in September, marking the highest level in four months. In contrast, economists had expected a modest decline in the index to 51.7.
The buck has risen to over a 1-week high of $1.5320 against the pound sterling, from around $1.54 this morning.
British households perceive that the value of their home rose in October, though the rate of increase was slower than from the previous month, a survey from Knight Frank and Markit Economic showed Friday. The house price sentiment index, or HPSI, dropped to 58.1 in October from 59.3 in the previous month. However, a reading above 50 signals a rise in house prices. This marked the thirty-first successive month of the index remaining above 50.
The greenback has also jumped to a 2-month high of Y121.385 against the Japanese Yen, from today’s low of Y120.219.
The manufacturing sector in Japan continued to expand in October, and at an accelerated pace, the latest survey from Nikkei revealed on Friday with a manufacturing PMI score of 52.5. That crushed expectations for a reading of 50.5, and it’s up sharply from 51.0 in September to reach a year-and-a-half high.
The leading index for Japan, which measures the future economic activity, dropped as initially estimated in August to the lowest level in fifteen months, final data from the Cabinet Office showed Friday. The leading index dropped to 103.5 in August, confirming the flash data, from 105.0 in the previous month. The latest reading was the weakest since May 2014.
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