Asia

Euro up for a second day; PMI eyed

LONDON (Reuters) – The euro edged higher for a second straight day on Thursday, but gains were tiny before manufacturing survey data that should shed some light on the outlook for the European economy.

Recent data out of Europe have indicated an economy struggling to grow, prompting policymakers to push into 2020 the timing for their first interest rate increase and investors to shed their euro holdings.

But the PMI data might provide some relief to investors. Data this week from China, a big source of demand for European factories, has indicated growing signs of strength in the world’s second-biggest economy.

“The China data has been quite decent and that should help manufacturing PMI data in Europe and a decent reading will push the euro higher,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.

China’s economy grew 6.4 percent in the first quarter, defying expectations for a further slowdown. Industrial production and consumer demand showed signs of improving.

The single currency EUR=EBS edged up 0.1 percent to $1.1304, rising for a second day. French PMI data was below forecasts.

But the euro was still more than 2 percent below a 2019 high of $1.157. Investors have cut their holdings of the currency, with net short bets at their highest in more than two years, according to latest positioning data.

The euro’s small rise comes amid a general drop in currency market volatility. A JP Morgan volatility index .JPMVXYG7 was near 2008 lows.

The dollar index .DXY against a basket of six major currencies was nearly flat at 97.051 after dipping 0.05 percent the previous day.

Commodity-linked currencies sagged after a surge in crude oil prices ran out of steam.

The Australian dollar was flat at $0.7179 AUD=D4 after briefly popping above $0.72 on strong jobs data for March.

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