The euro traded in proximity to six-week lows against the US dollar on Wednesday, amid signs that US economic recovery was gaining traction, adding to the view of a possible scale back to the Federal Reserve Bank stimulus program this month.
EUR/USD slid to a session low at 1.3159 at 6:10 GMT, after which consolidation followed at 1.3164. Support for the pair was likely to be received at September 3rd low and also the lowest point in six weeks, 1.3137, while resistance was to be encountered at September 3rd high, 1.3196.
The ISM manufacturing index in the United States came in at 55.7 in August, exceeding preliminary estimates of a value of 54.0, while in July the index stood at 55.4. Markit research group said that the final value of the US manufacturing PMI decreased to 53.1 in August from the initially estimated value of 53.9 in the middle of the preceding month. These data points strengthened the view of a possible stimulus pare back by the US central bank at its meeting on September 17-18th.
“The dollar is more likely to rise in the medium to long term,” said Yujiro Goto, a senior currency strategist at Nomura International Plc in London, cited by Bloomberg. “Should we continue to see nonfarm payrolls increase by about 150,000 to 160,000, the likelihood of a September tapering of Fed easing will remain intact.”
The ADP research institute will probably report on Thursday that companies in the United States added 180 000 job positions in August, following the 200 000 climb in number of jobs in July, which was the most considerable since December 2012, according to the median estimate of experts.
Meanwhile, later in the day a string of PMI indicators in the service sector was to be released out of the first four largest economies in the common currency region, followed by an equivalent indicator for the whole bloc. In addition, the United States will publish data on its trade balance also on Wednesday.
Elsewhere, the euro was little changed against the sterling, as EUR/GBP cross dipped 0.05% to trade at 0.8463 at 6:47 GMT. EUR/JPY pair was gaining 0.19% on a daily basis to trade at 131.41 at 6:48 GMT.