Investors’ concerns over the true health of the U.S. economic recovery have helped to ease the greenback’s recent strength. The latest data from Markit shows that preliminary PMI data edged lower in February, slipping from January’s reading of 57.1 to 55.5, below analysts’ expectations of a decline to 56.5. Only last week, investors shored up their holdings of U.S. Dollars following the testimony of the new Federal Reserve Bank chief, Janet Yellen, who painted a bright outlook which supported the Fed’s QE tapering plans and the likelihood that interest rates might soon be moving higher. However, the rally has lost steam, given the lack of hard economic evidence to the contrary.
As reported at 1:34 p.m. (JST) in Tokyo, the U.S. Dollar Index, the measure by which investors gauge the greenback’s relative health and strength, dipped to 79.952 .DXY, falling away from yesterday’s peak of 80.290 .DXY and last week’s 3-week high of 80.364 established after Yellen’s testimony on Thursday. The EUR/USD traded at $1.3835, up from yesterday’s trough of $1.3760.
New Data Eyed in U.S.
FX traders had been hoping to see revived economic activity after the series of disappointing data points which were viewed primarily as weather-related setbacks. Market players will look to more data coming out later today which includes consumer confidence readings and sales of new homes we well as two more chances to glean the views of Federal Reserve officials.