The euro rose above $1.170, reaching its highest level since May, as improving European economic data combined with a weaker US dollar. Eurozone business activity expanded again in August, led by a marked improvement in manufacturing, particularly in Germany, although services growth remained modest. The dollar weakened after the US Treasury increased its bond buyback programme, pushing long-term Treasury yields lower. Eurozone consumers also trimmed their one-year inflation expectations to 2.9% from 3% in June. Inflation nevertheless remains above the European Central Bank (ECB) target of 2%, keeping expectations of further monetary tightening alive after June’s rate increase. Investors are also monitoring volatility in global bond markets, where persistent inflation concerns and high government spending have driven yields higher.