By Geoffrey Smith — The dollar was mixed in early trade in Europe on Friday, coming off recent highs against the yen, euro and sterling but making further gains against emerging currencies.

By 3:30 AM ET (8:30 GMT), the , which tracks the greenback against a basket of developed currencies, was down 0.2% at 99.56, having hit its highest level in nearly three years on Thursday.

However, that represents only a modest pull-back after a rise of nearly 4% in the weeks since the novel coronavirus outbreak in China started to grab headlines.

, which broke through 112 for the first time since April on Thursday, fell 0.4% to 111.69.

, which hit its lowest in three years earlier this week, rebounded sharply to $1.0820 after both the French and German flash purchasing managers indices for February came out higher than expected. AFS Group analyst Arne Petimezas pointed out that the German numbers were “less stellar under the hood”, given renewed weakness in new export orders.

The yen’s snap back has happened despite a further drop in both manufacturing and services PMI.

Paul Donovan, chief economist with UBS Wealth Management in London, warned that PMIs tend to exaggerate actual developments, given the mood swings of survey respondents.

“There is a very good possibility that surveys will reflect the business news cycle more than they reflect reality,” Donovan said in a morning podcast.

Also of note later will be U.K. public sector borrowing figures, the last to be released before the new government’s annual budget in March. The ousting of Treasury chief Sajid Javid, combined with newsflow since then, have increased expectations of a big widening in the fiscal deficit, which would argue against a further interest rate cut from the Bank of England.

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The pound was up 0.2% at $1.2908

Overnight, the dollar continued to march higher against Asian currencies, a reflection of expectations that the slowdown in the Chinese economy will hit the likes of Japan, Indonesia and Thailand more than anywhere else.

The dollar also hit its highest in over a year against the Turkish lira, as the country struggles with increasing instability on its southern border with Syria.

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