The Japanese yen rallied to a three-week high on Tuesday as disappointing data on Chinese manufacturing undermined risk appetite, with investors waiting for European data to see if that will push currencies out of recent trading ranges.
Forecasts are for a 0.3 percent rise in euro zone gross domestic product from the quarter before. That would be a bigger increase than the previous quarter and may be taken as a sign of stabilization.
Even such marginal growth could squeeze speculators who have been amassing large short positions in the euro, worth a net $14.8 billion in the week to April 23.
Any signs of consolidation in the German CPI data and the eurozone GDP figures may lead to some unwinding of the extended short positions in the euro, particularly on the crosses.
But early trends in the currency markets were cautious after China's official purchasing management index dipped to 50.1 April. Forecasts had been for no change from March's 50.5 or an increase
Trading was thin with Japan on holiday, and set to get thinner on Wednesday when China and much of Europe will be off.
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29 May 2020 11:45 AM
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