NEW YORK (Reuters) – The euro held on to modest gains on Tuesday after surveys showed eurozone business growth remained robust yet below forecasts, and fears of a trade war with the United States kept the single currency trapped in narrow ranges.
IHS Markit’s Euro Zone Composite Flash Purchasing Managers’ Index (PMI), seen as an indicator of economic health, showed slower growth than expected.
The PMI data was “certainly not strong enough to bring forward the timeline for an eventual rate hike for the (European Central Bank), but also probably not weak enough to push that timeline out any further,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
With the U.S. central bank likely to raise interest rates at least twice more this year and the European Central Bank unlikely to raise interest rates until the second half of 2019, traders remained cautious about the outlook of the euro.
The euro EUR= was trading 0.14 percent higher at $1.1706 after hitting an intraday low of $1.1652 in early London trading, Reuters data showed.
The U.S. dollar was 0.23 percent lower against the euro and five other major currencies .DXY as comments last week from U.S. President Donald Trump that criticized the currency’s strength continued to weigh on sentiment. The greenback fell 0.26 percent against the yen to 111.04 yen.
In Turkey, a surprise decision from the central bank to leave interest rates unchanged sent the lira 2.7 percent lower to 4.866 lira per dollar TRY=.
The Turkish currency has lost 30 percent of its value against the dollar in the past six months.
Risk appetite was mostly firm after Beijing promised to pursue a more “vigorous” fiscal policy, stepping up efforts to support growth.
Both the euro and sterling edged higher against the Swiss franc EURCHF= GBPCHF= as investors bet that further policy easing from China would send investors into higher-yielding assets.
Bitcoin, the world’s best-known cryptocurrency, gained 6 percent to surpass $8,000 on Tuesday on the Bitstamp exchange BTC=BTSP, its highest since May 22.
Ethereum, the second-largest digital currency, gained 5.54 percent to $474.22 on Bitstamp ETH=BTSP.
Reports about the impending approval in the United States of a cryptocurrency exchange-traded fund have helped bolster demand in recent days.
Bitcoin has lost more than a third of its value in 2018 as institutional and retail interest declined. It has gained in eight of the past 10 sessions.
FILE PHOTO: Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration shot January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo
Reporting by James Thorne; additional reporting by Saikat Chatterjee and Tommy Wilkes in LONDON; editing by Jonathan Oatis
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