Investing.com -- The dollar was slightly lower in early morning trading in Europe, but holding on to most of the gains it posted after Friday’s stronger-than-expected U.S. employment report forced a rethink on the Federal Reserve’s future interest rate path.
The greenback’s biggest move was against the Turkish lira, rising nearly 2.5% after President Recep Tayyip Erdogan removed central bank governor Murat Cetinkaya at the weekend. Erdogan’s decision revived concerns about the safety of the lira, given his previous pressure on the central bank to cut interest rates despite an annual inflation rate that was still over 15% in June.
More broadly, the dismissal of Cetinkaya is an illustration of the political pressure on central banks across the world as the economy slows under the influence of trade disputes between the U.S. and its biggest trading partners. Another illustration of that trend will come on Wednesday and Thursday when Federal Reserve Chairman Jerome Powell testifies before Congress.
As of 3:45 AM ET (0745 GMT), the euro was at $1.1229, effectively unchanged from Friday’s close in Europe. The single currency remained under pressure after German industrial production data for May came out weaker than expected – although the number was nowhere near as shocking as the bigger drop in factory orders reported on Friday. Elsewhere, the French central bank cut its estimate for second-quarter growth in France to 0.2% from 0.3%, citing a slowdown in manufacturing. France has been a relative bright spot in the Eurozone economy this year, as consumer demand has held up thanks to President Emmanuel Macron’s concessions to the “yellow vest” protest movement.
The British pound was also still struggling at $1.2523, as it emerged that Boris Johnson, who has vowed to take the U.K. out of the EU on Oct. 31 even without transitional arrangements to mitigate the shock, appears to be on course for a clear victory in the Conservative Party leadership contest.
The dollar index, which measures the greenback against a basked of developed-market currencies, was at 96.82, down a touch from late Friday.