Euro Shrugs Off Weak PMI Data

The euro pushed above $1.38 on Friday morning as the dollar fell on expectations that the Federal Reserve will postpone the tapering of its $85 billion per month bond buying plan. The common currency traded at $1.3811 at 5:30 GMT on Friday morning, poised to end the week on a high. The government shutdown earlier in the month raised doubts about the bank's plans to cut down on its stimulus spending as most are expecting economic data from that period to show that the closure had a negative impact on the nation's fragile recovery. Data which was delayed due to the shutdown showed that the nation's recovery could have been losing steam even before the government's budget showdown. Reuters reported that uncertainty in the US caused the dollar to fall to a nine month low against a basket of major currencies. The euro's gains were capped by disappointing data which indicated that growth in the region's businesses unexpectedly fell in October. Reuters reported that Markit's Flash Composite Purchasing Managers' Index slipped to 51.5 from September's 52.2. Although analysts had forecast that the figure would rise to 52.5, the PMI is still above the 50 point mark which indicates expansion. As more US data comes out from the period during the government shutdown, investors will be looking for clues about the timeline for the Federal Reserve's taper. As it stands, most are not expecting the central bank to make any drastic moves before March, as the nation has yet to resolve its budget issues.