The dollar was almost unchanged against the euro and pared losses against the yen on Tuesday, after data showed that the US service sector expanded at it fastest rate in a year in February. The Institute of Supply Management said its non-manufacturing purchasing manager’s index rose to 56.0 from a reading of 55.2 in January. Analysts had expected the index to tick down to 55.0 last month. The euro hit session highs earlier after data showed that Germany’s services PMI rose to 54.7 in February, up from a preliminary reading of 54.1. The final euro zone services PMI rose to 47.9 from a preliminary reading of 47.3. Another report showed that euro zone retail sales rose 1.2% in January, well above expectations for a 0.2% gain. But the single currency remained under pressure amid concerns that Italy will be unable to pass structural reforms and austerity measures as the country edged closer to fresh elections, following inconclusive elections last week. Worries over the outlook for Italy, the euro zone’s third largest economy, fuelled speculation over a possible rate cut by the European Central Bank in the coming months.
USD/JPY dipping 0.04% to 93.42. The dollar remained supported as expectations for more aggressive easing measures by the Bank of Japan remained intact. The dollar was slightly lower against the pound, with GBP/USD easing up 0.09% to 1.5125 after data showed that the U.K. services PMI unexpectedly rose to a five-month high in February, allaying fears over a possible triple-dip recession. The U.K. services PMI rose to 51.8 from 51.5 in January, against expectations for a decline to 51.0. The USD edged higher against the Swiss franc with USD/CHF rising 0.13% to 0.9420. The USD was broadly lower against its Canadian, Australian and New Zealand counterparts, with USD/CAD adding 0.12% to trade at 1.0285, AUD/USD climbing 0.40% to 1.0235 and NZD/USD easing up 0.14% to 0.8287. Earlier Tuesday, the Reserve Bank of Australia left rates on hold at 3%, saying that the bank’s current monetary policy is appropriate. The announcement came after official data showed that retail sales in Australia rose 0.9% in January, more than the expected 0.4% increase.
EasyForexNews Research Team