Nervousness over banks sends euro 1% lower despite PMI

By Alves Joice

LONDON( Reuters )- On Friday, the lira fell sharply against a strengthening penny amid concerns about institutions, with better-than-expected financial information failing to improve mood.

Flash Purchasing Managers’ Index ( PMI ) data failed to increase the single currency because market sentiment was shaky, with European banks falling 5.3 %.

According to data released on Friday, S & P Global’s flash Composite Purchasing Managers’ Index( PMI ), which is regarded as a reliable indicator of overall economic health, increased from February to its 10 month high of 54.1 in March.

According to a Reuters surveys, that was significantly higher than the 50 threshold used to distinguish between growth and compression.

Before the composite euro zone PMI data were released this morning, the euro had already fallen below the$ 1.08 support line, according to Jane Foley, head of FX Strategy at Rabobank London.

She continued,” The data were better than anticipated, but risk aversion is driving the market up to the safe haven dime.”

Deutsche Bank stocks dropped 14 %, raising questions about the integrity of the banks in Europe as a whole.

The euro dropped to$ 1.0722 by 1 %. The dollar index, which compares the money to six significant competitors, increased 0.6 % to 103.26.

Despite details showing the American market was expected to grow in the first quarter and courage was rising, risk aversion also drove gold 0.6 % lower to$ 1.2209.

After the Bank of England raised interest rates by 25 scorecard, the pound reached a seven-week large of$ 1.2341 on Thursday in tumultuous betting. However, it warned that if inflationary rates suddenly rose again, they may likely quickly dissipate, sparking rumors that the bank had ended its string of increases.

The Fed raised interest rates by 25 basis points on Wednesday as anticipated, but due to the bank sector’s unrest, the Fed took a careful approach on the viewpoint. However, Fed Chair Jerome Powell continued to open the door for additional fee raises if necessary.

In order to calm investment fears, U.S. Treasury Secretary Janet Yellen reiterated on Thursday that she was ready to take additional steps to guarantee the security of American bank deposits.

Following the unexpected problems of two local U.S. lenders and the forced sale of the troubled European banks Credit Suisse to competitor UBS, banking stocks have suffered this month.

The FX market, according to OCBC money strategist Christopher Wong, seemed to portend a period of risk-aversion, with safer haven proxies, such as gold and yen, outperforming and the majority of other currencies performing softer.

” Price action can go either way depending on whether there are any contagion surprises ,” I believe, with sentiment still being fragile.

The safe haven hankering was also in high demand, rising 0.85 % to 129.67 per dollar, reaching a peak of seven weeks.

According to data released on Friday, Japan’s base consumer prices slowed in February, but an score stripping away energy rates hit a four-decade high.

Analysts predict that the data will keep market expectations of a near-term adjustment to the Bank of Japan’s bond yield control policy alive because inflation is still higher than the bank of its 2 % target.

( Reporting from London by Joice Alves, Singapore by Ankur Banerjee, and Angus MacSwan editing )

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