The US dollar declined in European trading on Monday ahead of this week’s key employment report, while the euro rose yesterday after the first round of voting in the French elections.
The dollar index fell on Monday, which tracks the US currency against a basket of six other currencies, by 0.3% to 105.255, its lowest level in a week. The dollar index was affected by the strength of the euro on Monday, as the euro holds the largest weight in the basket.
These political news overshadowed the data showing that manufacturing activity in the euro area deteriorated to its worst last month with demand falling at a much faster pace despite factories cutting their prices.
Meanwhile, the euro maintained its position against the US dollar, falling by 0.07% to $1.0733 after rising to $1.0776 on Monday for the first time since June 13.
Investors expressed relief that Marine Le Pen’s anti-immigration and Eurosceptic party did not gain a larger share of the votes in the first round over the weekend, and the Federal Reserve’s preferred inflation measure, the personal consumption expenditures index, showed a slowdown in inflation on Friday, raising expectations that the US central bank will start cutting interest rates later this year.
This week’s focus will be on the non-farm payrolls report due on Friday, as traders look for new signs of when the Federal Reserve might start cutting interest rates.
