The US dollar fell as commodity currencies gained, which were boosted by strong Chinese manufacturing activity data, and the euro gained after German inflation jumped last month, raising expectations of a eurozone interest rate hike.

china manufacturing activities

China’s manufacturing activity expanded at the fastest pace in a decade, according to the latest data, strengthening the currencies of Australia, New Zealand and the Chinese yuan. The official manufacturing purchasing managers’ index (PMI) jumped to 52.6 last month from 50.1 in January. China’s non-manufacturing activity also accelerated in February, with the Caixin/S&P Global manufacturing PMI reading for last month beating market expectations.
 
Another top performer was the euro, which rose 0.8% to $1.066. The German inflation report was the driver. Traders said there was a large option expiring on Friday at $1.07 on the euro, indicating further room for strength in the single European currency.
 
German consumer prices, which are adjusted to compare with other European Union countries, rose more than expected, boosting expectations of a European Central Bank interest rate hike after the data showed no easing of stubborn cost pressures.
 
On the other hand, data showed that US manufacturing activity contracted for a fourth straight month in February. The ISM manufacturing PMI edged up to 47.7 last month from 47.4 in January, the first increase in six months. A PMI reading below 50 indicates a contraction in manufacturing. Therefore, the US dollar also weakened.
 
Given these conditions, investing in commodity currencies and the euro is an attractive option at this time. However, investors should remain vigilant about market fluctuations and do proper analysis before deciding to invest.

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Oil Prices Rise on China Demand Outlook


Warning!

This analysis is based on fundamental and technical views from trusted sources, not advice or invitation. Always remember that this content is intended to enrich the reader's information. Always use independent research first regarding other forex information to be used as a reference in your trading.

 

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