Euro hits fresh highs but data disappoints

The euro thrust higher on Friday, hitting a record high on a trade-weighted basis and reaching a fresh peak against the dollar.

Although the European currency slipped back following the release of much weaker-than-expected eurozone economic data, it had already moved as high as $1.4120 - a record high.

Manufacturing and services purchasing managers indices fell sharply in September, reflecting the market turmoil seen since the beginning of August.

“The data will increase pressure on the European Central Bank to adjust its policy stance from a tightening bias to a neutral bias,” said Martin van Vliet at ING Financial Markets.

By late morning in London, the euro had slipped back to $1.4071, unchanged on the day.

Sterling climbed 0.2 per cent against the euro to £0.6983, as sentiment improved following turmoil at the Bank of England over the past few sessions. The central bank had come under criticism for its handling of the financial crisis that triggered a run on UK bank Northern Rock.

As relative calm returned to the UK equity market, the pound was lifted. It rose 0.3 per cent to $2.0150 against the dollar and 0.7 per cent against the yen to Y232.57.

The Canadian dollar continued its record run to C$0.9945, having moved beyond parity for the first time since 1976 on Thursday.

Source:  ft.com