NEW YORK- The dollar fell against major currencies as US yields languished and the euro got an extra late-day lift following a earlier boost from an upbeat survey of purchasing managers.
The dollar index fell 0.5 percent to 90.8080, a level not seen since early March, after the euro climbed 0.7 percent to $1.2098, pushing through its earlier high for the week.
More than half of the euro’s appreciation came late in the day after the market digested earlier economic news.
“This is thin markets on a Friday afternoon,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York. “The euro making new highs for the week late in the day suggests it is going to have momentum into next week.”
The exaggerated move came after the markets saw a European purchasing managers’ index for April come in better than expected, supporting the view that the region’s economic recovery is accelerating and won’t keep lagging so far behind the US recovery.
A similar US survey showed factory activity powered ahead in April. Another report said new home sales in the United States jumped 21 percent in March. Both affirmed that the economy was being lifted by government stimulus and increased vaccinations against the coronavirus.
The US survey results were tempered by manufacturers reporting increased struggles to get raw materials and other supplies for production.
Yields on 10-year US Treasuries traded in a narrow range through the news and were at 1.56 percent late in the day, about four basis points lower than at the start of the week.
Until the late-day boost to the euro, Chandler said Friday’s major currency markets were largely “a continuation of what we have seen since the beginning of the month,” with the dollar losing much that it had gained earlier in the year as yields climbed to 1.75 percent on March 31.
“The dollar had a very strong first quarter and the market is still unwinding that,” Chandler said.
The dollar in the first quarter gained 3.6 percent but it has lost about 2.6 percent so far in April.
Markets now are looking toward next week’s meeting of the US Federal Reserve Open Market Committee to review monetary policy and the economy.
Fed Chair Jerome Powell is expected to echo Thursday’s message from European Central Bank President Christine Lagarde that scaled back some expectations for a withdrawal of monetary easing.
