By ForexYard – The euro rose to a new six-month high of $1.3733 Friday, carried on a fresh wave of positive risk sentiment. Although the single currency was initially hurt by strong U.S. data Thursday, it started to bounce back after China reported that its purchasing manager’s index for manufacturing rose by more than the market had expected.
Optimism about the global recovery was helped further by revisions to last week’s purchasing managers’ indexes from the euro zone. These showed that the joint euro zone index was actually higher than initially estimated–up at 53.7 from 53.6 in September. This helped the euro to shrug off earlier bad news that German retail sales hadn’t only fallen by 0.2% in August, instead of rising by 0.5% as expected, but that sales in July had also fallen by 0.4% rather than by the 0.1% that had been estimated originally.
As investors showed more interest in risky assets, European stock markets posted gains of nearly 0.7%, following on from a 0.4% rise in the Nikkei Index in Japan. Some analysts reckon the euro will continue to rally, especially if new U.S. data due later today proves to be as disappointing as expected. The Institute for Supply Management’s index for manufacturing is forecast to have fallen to 54 last month from 56.3 in August. Also, the latest University of Michigan’s consumer confidence index is seen down at 67 from 68.9.
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