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European Session – Euro weakens for second day after Eurozone PMI data

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European markets opened for the first time today after breaking for the Easter Holidays on Friday. The euro was weak for a second day against the dollar after Eurozone services PMI data. The final reading and the composite number for March were both revised down slightly from their flash readings.

The euro tumbled to a low of 1.0833 after peaking at 1.0941 in the European session. Tomorrow the Eurogroup will meet, with Greece at the top of the agenda. Any news out of the meeting could have an impact on the single currency.

Sterling was strong against the euro after UK services PMI beat expectations and hit an eight-month high of 58.9 in March, up from 56.7 in February. As a result EURGBP fell to 0.7283 from a peak of 0.7338. The pound remains within a range against the dollar since mid-March and fell to a low of 1.4828 today before steadying at 1.4880. Helping cap cable’s gains are the stronger dollar and UK election uncertainty.

The dollar rose back above the key 120.00 yen level to hit a high of 120.27, extending yesterday’s gains made after encouraging data on the US services sector. The details of the ISM report showed strength in exports and employment in March, giving hope for a better recovery from the first-quarter slowdown. The next risk for the dollar/yen pair will be tomorrow’s Bank of Japan monetary policy statement and BoJ Governor Kuroda’s press conference.

The Australian dollar retraced some of its 1% gains made versus the greenback. The RBA left rates on hold at 2.25% today, and aussie surged to 0.7710 from 0.7594 before easing down to 0.7650. The RBA statement maintained a dovish bias which means there could be a rate cut ahead and this will cap any gains in the Australian currency.

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