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Dollar slips vs euro as data weighs; bitcoin hits new high
Global Banking & Finance Review®
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By Saqib Iqbal Ahmed
NEW YORK (Reuters) -The dollar slipped against the euro on Tuesday after data showed U.S. services industry growth eased and as investors braced for a busy week that includes a European Central Bank rate decision, congressional testimony from Federal Reserve Chair Jerome Powell and U.S. jobs data.
Bitcoin hit a record high on Tuesday, fueled by investors pouring money into U.S. spot exchange-traded crypto products and the prospect that global interest rates may fall.
U.S. services industry growth slowed a bit in February amid a decline in employment, according to the Institute for Supply Management (ISM). Separately, data showed new orders for U.S.-manufactured goods dropped more than expected in January.
“The ISM numbers today showed growth in the service sector slowed in February, in no small part due to a decline in employment levels, and that has raised some concerns about the strength of the U.S. economy,” said Stuart Cole, chief economist at Equiti Capital.
The euro was 0.11% higher against the dollar at $1.08675.
Still, most major currency pairs, traded in familiar ranges.
“The G10 FX world remains incredibly subdued,” said Michael Brown, market analyst at online broker Pepperstone in London.
“There’s some reluctance from most market participants to trade with conviction ahead of Powell tomorrow, ECB on Thursday, and of course NFP (nonfarm payrolls) on Friday, which is probably exacerbating the quiet conditions at the start of the week,” he said.
The dollar index, which measures the buck’s strength against a basket of six currencies, is up about 2.3% for the year, lifted by better-than-expected U.S. economic data, but the currency’s rally has stalled in recent sessions, as investors await clarity on Fed policy.
Chair Powell is likely to reinforce the message that the Fed wants to wait for more data before any rate cuts when he testifies to Congress about inflation and the economy on Wednesday and Thursday.
“We should expect Fed Chair Powell to reiterate patience and emphasize (there is) no hurry to cut rates,” said Christopher Wong, currency strategist at OCBC in Singapore.
The ECB meets to discuss policy on Thursday but is widely expected to leave interest rates at a record 4%. Investors will be on the lookout for any hints about when rates might start to fall and will scrutinize updated economic projections.
Survey data on Tuesday showed that business activity in the euro zone showed signs of recovery last month.
U.S. employment figures for February have the potential to rock markets on Friday. Economists expect hiring slowed last month, but a bigger-than-expected number could add to the dollar’s rise this year.
Meanwhile, news out of China’s National People’s Congress contained few surprises, with Beijing sticking with an economic growth target of 5% and a budget deficit of 3%. Analysts at Nomura said the growth target will be challenging to meet without more stimulus.
The offshore yuan was little changed at $7.2116. [CNY/]
The dollar slipped 0.27% against the yen to 150.13, retreating further from last week’s high of 150.85.
A break higher would open the way to November’s top at 151.92, but would also run the risk of provoking Japanese intervention.
Sterling rose 0.24% to $1.2721 ahead of the British budget on Wednesday. Finance Minister Jeremy Hunt has been trying to dampen speculation about big pre-election tax cuts.
Bitcoin was 2.91% lower at $65,534, after hitting a high of $69,202, surpassing its November 2021 peak.
(Reporting by Harry Robertson in London, Wayne Cole in Sydney and Ankur Banerjee in Singapore; Editing by Sam Holmes, Kirsten Donovan, Christina Fincher and Jonathan Oatis)
The dollar index measures the value of the U.S. dollar against a basket of six major currencies, providing insight into the dollar's strength in the foreign exchange market.
Bitcoin is a decentralized digital currency that allows for peer-to-peer transactions over the internet without the need for a central authority or intermediary.
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals.
Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate on decentralized networks based on blockchain technology.
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