The European single currency and euro zone government bond yields rose yesterday after a survey showed the bloc’s manufacturing businesses had their best month of growth in six-and-a-half years.
US stocks looked set to open lower, with Wall Street futures down 0.3 per cent.
Forecast-beating surveys in the euro zone’s two biggest economies, France and Germany, helped pull the euro up against the dollar, which had wobbled against the yen overnight on comments from US President Donald Trump.
The pan-European STOXX 600, however, was dragged down by unloved media stocks. WPP shed more than 10 per cent after the world’s largest advertising group cut its sales forecast.
The dollar wobbled against the yen after Mr Trump told a rally he would be willing to risk a government shut-down to secure funding for a wall on the US border with Mexico.
Financial markets have been buffeted in recent weeks by heightened tensions on the Korean peninsula, turmoil in the White House, and growing doubts about Mr Trump’s ability to fulfill his economic agenda.
A gathering of global central bankers this week in Jackson Hole, Wyoming, has prompted investors to rebalance their currency positions, leading them to reduce some of their short dollar bets.
The dollar was down slightly against the yen at 109.38 yen, back near the day’s low plumbed after Mr Trump told supporters in Arizona “If we have to close down our government, we’re building that wall”.
The dollar index against a basket of six major currencies was down slightly at 93.412 after rising 0.5 per cent the previous day.
The euro was up 0.2 per cent at $1.1784 after slipping about 0.5 per cent on Tuesday on weaker-than-expected German investor confidence.
Speeches from European Central Bank President Mario Draghi and Fed Chair Janet Yellen will headline the annual Jackson Hole event, although neither are expected to an-nounce any significant policy.
“The ECB is clearly very concerned about the recent appreciation in the euro... and recent ‘misinterpretations’ by traders to Draghi’s comments will likely mean he steers clear (of discussing policy) once again,” said Craig Erlam, senior market analyst at OANDA.
Mr Draghi gave a speech at Lindau, Germany, yesterday but did not discuss the ECB’s current monetary policy.
In commodities, Brent crude traded 0.3 per cent lower at $51.68 a barrel after data showed a surprise build in US gasoline inventories. Improving Libyan output also added to oversupply concerns in the crude oil market.
Nickel prices rose to an eight-month high while zinc touched its highest since August 2007 on ex-pectations of strong demand from China, supply concerns and declining stockpiles.