EUR/USD trades close to session highs after Euro zone manufacturing PMI, investor confidence data

The euro managed to erase earlier losses and climbed to a session high against the US dollar on Monday, as the final value of the manufacturing PMI in the Euro zone for October coincided with the preliminary data and investor confidence in the region rose.

Having fallen to six-week lows earlier at 1.3442, the pairs lowest point since September 18th, EUR/USD hit a session high at 1.3513 at 8:00 GMT. Consolidation followed at 1.3509, rising 0.12% for the day. Support was likely to be received at September 18th low, 1.3338, while resistance was to be met at October 15th high, 1.3570.

Earlier on Monday Markit Economics reported that the final value of the index, gauging manufacturing activity in the Euro zone for October matched the preliminary reading at 51.3 and also improved in comparison with September, when the index came in at 51.1.

Germanys final manufacturing PMI in October exceeded its preliminary value, rising to 51.7 from 51.5.

French final manufacturing PMI in October came in at 49.1, while the preliminary reading was at 49.4.

Italian final manufacturing PMI during the same month remained almost without change, coming in at 50.7, while the preliminary value was at 50.8.

Manufacturing activity in Spain, on the other hand, rose to its highest level in 2.5 years in October, hitting 50.9, while the preliminary reading pointed 50.7.

In addition, according to the SENTIX survey on investor confidence, encompassing 2 400 investors, the corresponding index advanced to 9.3 in November, marking its highest point in 2.5 years and also a fourth consecutive monthly increase, from 6.1 in October. Preliminary estimates pointed that the index will improve at a lesser rate to reach 6.2 in November. The value of the index is estimated after the number of investors awaiting negative development is subtracted from the number of investors awaiting positive development and the resulting figure is divided by the total number of participants in the survey. Novembers result implied that investors assessed the current economic environment as being better in comparison with a month ago. The index of current assessment improved to -3.3 in November from -8.5 in October, while the index of economic expectations climbed 1 point to reach a value of 22.8 in November.

The common currency recorded its most considerable weekly decline since July 2012 last week, as some experts projected that the European Central Bank (ECB) led by President Mario Draghi will consider a reduction in its benchmark interest rate in order to revive economic growth in the bloc. Bank of America Corp., Royal Bank of Scotland Group Plc and UBS AG predict that the central bank will cut borrowing costs at its meeting on policy on Thursday, according to a Bloomberg survey of 68 economists, with the remaining participants expecting no change. The ECB last reduced its benchmark rate in May to a record low level of 0.5%. “Sentiment toward the euro has turned in the last few days and that’s been endorsed by some of their data disappointing,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Auckland, cited by Bloomberg. “We wouldn’t be surprised to see Draghi just elevating slightly the chance for a rate cut, which would keep the pressure on the euro.”

Meanwhile, the greenback received strong support on Monday after Federal Reserve Bank of Dallas President Richard Fisher said earlier in the day that the central bank needed to pare back its record stimulus as soon as possible. At a business conference in Sydney he also underscored that corporate balance sheet results in the United States appeared to be stronger than ever. Any scale back of the monetary stimulus by Fed was to correspond entirely with economic data, according to Fisher. He expressed concerns over the possible threat, which may occur, as a result of bank’s loose monetary policy, in case companies’ balance sheet results begin to normalize.

Elsewhere, the euro was little changed against the sterling, as EUR/GBP cross dipped 0.07% on a daily basis to trade at 0.8464 at 9:16 GMT. EUR/JPY pair was gaining 0.11% to trade at 133.24 at 9:18 GMT.

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