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FOREX-Dollar rises, euro falls as global turbulence grows

Fri, 21st Aug 2020 16:30

* Dollar rises, as euro falls after weak PMI data

* Canadian dollar little moved despite stellar retail sales

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(New throughout; changes dateline, previous LONDON)

By Kate Duguid

NEW YORK, Aug 21 (Reuters) - The euro fell on Friday as an
August batch of business surveys pointed to a stuttering
economic recovery, while the U.S. dollar climbed, headed for its
first weekly rise since mid-June.

Flash euro zone manufacturing and services purchasing
managers index (PMI) numbers for August reported Friday were
worse than expected. IHS Markit's flash Composite Purchasing
Managers' Index, seen as a good gauge of economic health, sank
to 51.6 from July's final reading of 54.9.

The single currency dropped to a one-week low of
$1.175 earlier Friday and was last trading down 0.67% at $1.178.

"Clearly the PMI numbers this morning suggest that Europe is
losing a little momentum here and that we're seeing some
turbulence in other areas of the global economy. So that is
weighing on the performance gap between the U.S. and its major
counterparts," said Karl Schamotta, chief market strategist at
Cambridge Global Payments.

The euro, which surged from under $1.12 in early July to a
more than-two-year high of $1.197 earlier this week, has been
the biggest beneficiary from a dollar whacked recently by
concerns about the U.S. economic recovery.

With its Friday rebound the dollar was on course to escape a
ninth consecutive weekly decline. Should the greenback end the
week down, that would mark the longest losing streak since the
summer of 2010 and a run that has only happened five times since
1990.

The recovery in the dollar began on Wednesday after the
Federal Open Market Committee released minutes from its last
meeting, the tone of which was more dovish than expected. The
minutes prompted dollar bears to buy into the heavily shorted
currency, fueling its biggest one-day surge in more than two
months. Bears have reaped rich returns from shorting the
greenback in recent weeks as the United States has struggled to
tame the coronavirus pandemic and the unprecedented policy
stimulus unleashed by the Fed had darkened the outlook for the
safe-haven dollar.

"You're seeing a bit of an unwind in the short dollar trade
that had gained so much momentum in the last couple months,"
said Schamotta.

The dollar index, which measures the greenback against a
basket of rivals, was last at 93.345, up 0.71%.

Elsewhere, the Canadian dollar was little moved on
Friday despite a record increase in retail sales in June.

"Traders got a bit too far over their skis in betting that
Canada is going to outperform solidly in the long run," said
Schamotta.

(Reporting by Kate Duguid in New York and Tommy Wilkes in
London; Editing by Steve Orlofsky)

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