Euro crumbled to a session low versus the dollar on PMI reports and FED statement

On Thursday the euro collapsed to a trade days low against the advancing US dollar after the release of the series of PMI indicators from Euro zone countries.

EUR/USD pair slid to 1.3208 during European morning trade, currently the session low and lowest value since June 10th, after which consolidation followed at 1.3220. The cross was to find support at June 10th low, 1.3176, while resistance was to be encountered at current session high, 1.3303.

Earlier today official data stated that Advance Manufacturing Purchasing Managers Index (PMI) in Germany showed a lower than expected reading in June, 48.7 versus 49.9. The result was also below the one, recorded in May, 49.4. Manufacturing results suggested a limited growth during Q2. Outlook remained negative, as new orders and employment indicators stood on lower levels. Additionally, German Advance Services Purchasing Managers Index (PMI) managed to increase above the expected 50.0 level to 51.3 in June, improving in comparison with the reading in May, 49.7. Data implied that service sector confidence remained weaker in comparison with June 2012.

Private sector activity in the Euro region as a whole shrank again in June, despite the fact that the contraction slowed down compared to the previous period. German economy was the only one to continue expanding. It became clear that the Advance Manufacturing PMI in the Euro zone registered a slight increase in June to 48.7, above the expected 48.6 and advancing from 48.3 in May. Activity in Euro zones service sector showed certain improvement, with Advance Services PMI rising to a 15-month high in June, 48.6, a result exceeding the projected 47.5 reading and the recorded 47.2 reading during the preceding month. These results match other recently released indicators, shedding a beam of light that the ongoing for seven consecutive quarters recession in the region might be seeing its end. PMI indicators suggested that overall activity probably shrank by a slower pace during Q2, compared to Q1, when markets saw a decreasing GDP by 0.2% and, respectively, by 0.9% on annual basis. Still, values of these indexes, that remain below 50.0, are a sign of contraction in business activity. In May the registered decrease was the smallest for the past four months.

Meanwhile, US dollar advanced on a broad scale against its major peers after Ben Bernanke’s statement on Wednesday. He announced, that the central bank may start scaling back its unprecedented bond-purchasing program this year and end it entirely in mid-2014, if the economy finally achieved the sustainable growth FED has sought since the end of the recession in 2009. The Federal Open Market Committee left the monthly size of asset purchases unchanged at 85 billion USD.

Ultimately, the euro fell to session lows versus the British pound as well, with EUR/GBP cross decreasing by 0.27% to 0.8563.

The United States was expected to release the weekly report on Initial Jobless Claims, along with the data, regarding Existing Home Sales later on Thursday.