The euro strengthened against the U.S. dollar on Friday, as weak U.S. manufacturing activity data sparked worries the trade conflict with China may hurt the world's largest economy. The weaker-than-expected data, a closely watched proxy for business spending plans, drove the dollar lower and added to a fall which began Thursday following a report that showed manufacturing activity hit its lowest level in almost a decade in May.
The reports suggested a sharp slowdown in U.S. economic growth is under way, which could affect the dollar's safe-haven status. The pound rose against dollar on Friday, after British Prime Minister Theresa May set out a departure date after failing to push through a Brexit divorce deal.
Trading was volatile as concerns rose that she is likely to be succeeded by a Eurosceptic leader, potentially increasing the chances of a 'no-deal' Brexit. The process to elect a new party leader will begin next month - markets are concerned that a tougher stance with the European Union might prompt investors to turn more negative on the outlook for the pound in the coming months.
These upcoming days the macroeconomic calendar will be quite light, as the most relevant release will be revisions of data already released. Central banks had nothing to say and would likely stay below the radar these upcoming days, but trade tensions will retain the spotlight. Risk sentiment will keep leaning the scale in dollar's favor.