Euro drifts lower in London

The euro edged lower against the dollar on Friday after weaker-than-expected eurozone manufacturing data for September dragged the currency from a fresh record high. The eurozone report helped the dollar recover from 15-year lows against basket of major currencies, analysts said, although sentiment on the greenback remained bearish.
The dollar has been pounded in recent sessions after an aggressive rate cut by the Federal Reserve this week and expectations of further easing. "Eurozone PMI was quite weak today and that has weighed on the euro," said Vincent Chaigneau, head of FX and FI strategy, at Societe Generale.
Data showed on Friday that eurozone private sector growth slowed to a two-year low in September, as new orders plunged, making any further interest rate hike this year unlikely.
The figures provide clear evidence that turmoil which has seen stock and foreign exchange markets swinging wildly and the European Central Bank pumping temporary funds into money markets to alleviate soaring rates has affected the real economy.
At 1139 GMT, the euro was down 0.1 percent on the day against the dollar at $1.4059, after rising to a record high at $1.4120 according to Reuters data. The euro trade weighted index also hit a lifetime peak at 108.84. But the euro was stronger versus a broadly weaker yen, trading 0.6 percent higher at 162.31.
ECB policymakers have kept up generally hawkish rhetoric in contrast to the US where further rate cuts are expected. A half percentage point cut in the fed funds rate to 4.75 percent has tarnished the allure of dollar-denominated assets. Analysts see this trend continuing given expectations that the Fed may cut rates again this year.
"This whole move lower in the dollar started with the US cutting rates on Tuesday and it does appear that the Federal Reserve is in a reflationary stance and that is positive for euro/dollar," said Naeem Wahid, currency strategist at Halifax Bank of Scotland Treasury Services.
The US dollar fell to C$0.9939 against the Canadian dollar, its weakest level in 31 years, after having breached parity on Thursday for the first time since late 1976. The greenback last traded at C$0.9998, down 0.1 percent on the day.
Against a basket of currencies, the US currency fell to a fresh 15-year low at 78.398, but recovered to 78.700, up 0.15 percent. The dollar rose 0.7 percent against the yen to 115.45. Both the Australian and New Zealand dollars were up 0.6 percent versus the yen.