SINGAPORE- The dollar held near a one-week high against its major peers on Monday as traders weighed the impact of protracted monetary tightening cycles on the global growth outlook and as worries over a deep downturn in major economies lingered.
Investors were also on guard after dramatic weekend events in Russia, though reaction in the currency market was subdued as they assessed the implications of the aborted mutiny.
The euro was nursing its losses from last week and was last up 0.07 percent at $1.0902 in Asia trade.
The single currency had fallen to a one-week low on Friday after data showed that euro zone business growth virtually stalled in June amid a deepening downturn in manufacturing activity and a slow expansion of the bloc’s dominant services industry.
Sterling rose 0.1 percent to $1.27285, reversing some of its 0.8 percent fall last week after an outsized 50-basis-point rate increase from the Bank of England stoked fears of a British recession.
Flash Purchasing Managers’ Index (PMI) data on Friday showed Britain’s economy displayed signs of a slowdown this month but inflation pressures stayed high.
Meanwhile, US business activity fell to a three-month low in June and the contraction in the manufacturing sector deepened, though the overall picture indicated economic growth ticked up a notch in the second quarter.
“Again, (there was) another set of weak PMI data coming out of Europe,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (CBA). “By contrast, PMI data in the UK and the US continue to be pretty solid in the face of aggressive interest rate hikes.
“The aggressive monetary tightening in the major economies … will likely continue to see the global economy continue to deteriorate, which will underpin the safe haven US dollar.”
Against a basket of currencies, the US dollar steadied at 102.71, after a gain of more than 0.5 percent last week, its first in nearly a month. -Reuters
