The euro slid to the lowest point in five weeks against the US dollar on Tuesday, despite the positive Euro zone PMI data, as market sentiment received a boost after the upbeat Chinese manufacturing data, which suggested a positive view over global economic recovery and a boost for the greenback.
EUR/USD fell to a session low at 1.3163 at 6:31 GMT, the pairs lowest point since July 25th, after which consolidation followed at 1.3167, down by 0.19% for the day. Support was likely to be found at July 22nd low, 1.3133, while resistance was to be encountered at psychological 1.3200 level.
China Logistics Information Center reported that country’s manufacturing PMI increased to a reading of 51.0 in August, or the highest point in 16 months, from 50.3 in July, while experts had anticipated that the index will advance to a value of 50.6. In addition, HSBC Holdings Plc and Markit Economics said today that the final reading of their PMI for China came in at 50.1 in August from 47.7 in July, marking its largest rate of increase since 2010.
In the euro region, Markit research group said on Monday that recovery in the common currency zone’s manufacturing sector strengthened in August, after industries in Italy and Spain showed higher activity and returned to growth for the first time since 2011, following the period of contraction, due to the region’s debt crisis. The final manufacturing PMI in the Euro zone came in at 51.4 in August from 51.3 in July.
In the mean time, market players were eyeing the ISM Manufacturing indicator out of the United States, scheduled for release later in the day, as it may prove to be the key indicator for the US central bank to start scaling back its easing. US dollar was supported, namely because of expectations that the Federal Reserve Bank will begin tapering its asset purchases at its policy meeting on September 18th.
Elsewhere, the euro was lower against the sterling, as EUR/GBP cross erased 0.29% to trade at 0.8464 at 7:34 GMT. EUR/JPY pair was gaining 0.11% to trade at 131.21 at 7:35 GMT. Ultimately, the dollar index, which tracks the relative strength of the US currency against a basket of six other major currencies, advanced 0.3% to reach 82.440.