In early European deals on Tuesday, the euro has been extending its Asian session’s gains against the currencies of U.S., U.K. and Japan as a report showed that Eurozone’s manufacturing PMI recovered from an 8-month low in October.
Eurozone manufacturing activity improved more than initially estimated in October, survey results from Markit showed today. The final Purchasing Managers’ Index for October rose to 54.6 in October from September’s eight-month low of 53.7. The flash estimate for October was 54.1.
After showing a mixed trade earlier, most European stocks are currently trading higher.
Germany’s DAX and France’s CAC 40 index are currently up by 0.3% each and U.K.’s FTSE 100 index is gaining 0.5%.
The euro was supported in Asian session by an unexpected hike in Australia’s interest rate.
The Reserve Bank of Australia surprised financial markets today by hiking its official cash rate by 25 bps to 4.75% for the first time in six months.
Most analysts had expected the bank to keep rates on hold for another month to assess an uncertain global outlook.
The euro advanced against the pound in early European deals on Tuesday. The euro-pound pair that closed yesterday’s trading at 0.8664 is currently worth 0.8720. On the upside, 0.877 is seen as the next target level for the European currency.
During early European deals on Tuesday, the euro climbed against the yen. As of now, the euro-yen pair is worth 112.80, compared to 111.84 hit late New York Monday. If the euro rises further, it may likely target the 113.2 level.
Minutes from the Bank of Japan’s October 4-5 monetary policy meeting released earlier in the day showed that some of the members of the central bank believed that further stimulus measures might do more harm than good.
In addition, some of the policy board members said that an unchecked rise from the yen would almost certainly weigh on the economy.
The euro strengthened against the dollar in early European session on Tuesday. The euro-dollar pair is currently trading at 1.3990 and the next upside target level for the euro is seen at 1.401. The pair was worth 1.3894 at yesterday’s close.
The euro that rose to 1.3825 against the Swiss franc at 1:25 am ET Tuesday weakened thereafter. Presently, the euro-franc pair is worth 1.3770 with 1.374 seen as the next downside target level. At yesterday’s close, the pair was quoted at 1.3782.
The U.S. Federal Open Market Committee will begin its two-day monetary policy meeting today and will announce its interest rate decision tomorrow.
It is widely expected that the Fed will announce a Treasury bond buying program, known as quantitative easing, to inject more liquidity into the U.S. economy.