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Survey data on Monday showed factories in the euro zone had
their worst month for almost six years in March, while economic
data in the United States offered more hope. That reinforced
concerns that while both economies face a slowdown, the euro
region looks set to come out worse.
Kit Juckes, a strategist at Societe Generale, said that while
there was little correlation between the gap in the Purchasing
Managers Index surveys in the euro zone and the United States,
signs of weakness would test the single currency as it fell
towards the bottom of its recent trading range.
"The market is bearish and short, the poor data are not
unexpected, but even so, a break through $1.1150 would surely
trigger short-term stops," he said.
The euro weakened as much as 0.2 percent to $1.1190, slightly
above the $1.1176 level reached last month - the weakest since
June 2017.
For a graphic on Euro weakens vs dollar, see - https://tmsnrt.rs/2CPuyP4
The dollar index, which measures the U.S. currency against a
basket of rival currencies, rose as much as 0.3 percent to
97.430, a three-week high, helped by a rally in U.S. stocks on
Monday and the more positive U.S. data.
Australia's dollar shed more than 0.6 percent to $0.7065. The
Reserve Bank of Australia's stress on the "downside risks for
the global growth environment" on Tuesday probably caused the
selloff even as the central bank kept interest rates on hold,
said Commerzbank analyst Esther Reichelt.
The Australian government downgraded its growth forecasts on
Tuesday but said it expected the economy to extend its enviable
recession-free run of growth into a third decade.
Reichelt said the Aussie should rebound, helped by optimism over
crucial trading partner China.
Sterling dropped half a percent after lawmakers rejected four
Brexit proposals, heightening Britain's uncertainty just 10 days
before it is due to leave the European Union. The pound fell to
$1.3025 before stabilizing around $1.3050 and stood at 85.835
pence against the euro.
The safe-haven Swiss franc strengthened to below 1.12 per euro
and near 2019 highs. It touched 1.1182 francs, not far from the
2019 highs of 1.1164 hit last week.
RBC Capital Markets strategist Adam Cole said he did not expect
the franc to hold its gains because the Swiss National Bank
remained "sensitive" to a stronger currency, particularly when
it traded beyond 1.12 francs per euro.
The SNB will be "the last central bank in the developed world to
tighten rates," he said, and that should weigh on the currency
in the medium-term.
Cryptocurrencies surged. Bitcoin jumped 20 percent to touch
$5,000, its highest since November. Analysts struggled to
explain the buying spree.
(Editing by Larry King, Andrew Cawthorne, William Maclean)
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