Euro staggers as traders wary of hawkish ECB; dollar gains

economictimes.indiatimes.com:

euro hit a two-week low on Tuesday as a worsening downturn in euro zone business muddied the bloc's rate outlook against a still-hawkish European Central Bank (ECB), while the dollar rose ahead of this week's trio of major central bank meetings. The offshore yuan strengthened in early Asia trade, following comments from China's top leaders on Monday pledging to step up policy support for its flailing economy. The euro was shaky at $1.1063, up just 0.02% having slumped to a two-week low of $1.1059 earlier in the session, after a survey on Monday showed euro zone business activity shrank much more than expected in July, reigniting recession fears.

The single currency had slid more than 0.5% in the previous session. «The extension of the weakness in the manufacturing sector as well as services, and Germany, in particular, being a lot weaker than expected… that's putting some question marks around the rhetoric that we should expect from the ECB on Thursday,» said Rodrigo Catril, senior currency strategist at National Australia Bank (NAB). Markets have fully priced in a 25-basis-point rate hike by the ECB at its meeting this week, though the path of future rate increases beyond July remains up in the air.

Elsewhere, sterling fell 0.11% to $1.2811, while the U.S. dollar index steadied at 101.39. Flash PMI survey similarly out in the UK on Monday showed Britain's private sector growing at its weakest pace in six months in July, while a separate survey pointed to U.S.