The euro managed to trim earlier losses against the US dollar on Thursday, after the release of mixed reports regarding activity in sectors of manufacturing and services for France, Germany and the Euro bloc as a whole.
EUR/USD fell to a session low at 1.3399 at 8:00 GMT, also the pairs lowest point since November 13th, after which consolidation followed at 1.3435, dipping 0.04% for the day. Support was likely to be received at November 13th low, 1.3391, while resistance was to be seen at current session high, 1.3441.
According to data by Markit Economics released earlier in the day, business activity in the Euro zone continued to lose steam in November, raising concerns whether economy in the region was capable of retaining the already gained momentum into the fourth quarter of the year. Those concerns appeared earlier in the year, as the upswing in activity has also slowed down within the period between July and September. Data revealed that the preliminary value of the index of manufacturing activity in the Euro zone slightly increased to 51.5 in November, meeting projections, from a final value of 51.3 in October. The preliminary value of the services PMI in the bloc, however, recorded a drop to 50.9 in November from a final reading of 51.6 in October. Experts had expected that the index will advance to 51.9 in November. These figures have been influenced mostly by the significant decline in business activity in France, which suggested that the country may probably be close to plunging into recession again.
The preliminary value of the manufacturing PMI in France remained below the key level of 50.0, which separates expansion from contraction, to reach 47.8 in November, while the final reading for October came in at 49.1. Expectations pointed that the index will show a certain improvement to 49.5 in November. The flash services PMI in France entered the zone of contraction, falling to 48.8 in November, as the final reading a month ago stood at 50.9. It was forecast that the services PMI in the country will climb to a value of 51.0.
On the other hand, the euro regained ground against the greenback, following Germanys data points, which implied that business activity in both sectors of the economy continued to expand in November and exceeded preliminary estimates. The flash value of the manufacturing PMI for Germany advanced to 52.5 in November from a final reading of 51.7 in October. The preliminary services PMI in the country rose to 54.5 in November, while its final value stood at 52.9 during the preceding month.
“The average reading over the fourth quarter so far is signaling a very modest 0.2% expansion of GDP across the region, and it looks like momentum is being lost again”, Chris Williamson, chief economist at Markit Economics said.
Meanwhile, the US dollar remained supported after the publication of the minutes of Federal Reserve Bank’s policy meeting in October on Wednesday. It revealed that central bank’s policymakers “generally expected” employment data, coming out of the United States to improve, as this would “warrant trimming the pace of purchases in coming months.” The bank currently purchases 85 billion USD of Treasuries and mortgage-backed securities each month. According to the minutes, Federal Open Market Committee (FOMC) members also underscored that the Quantitative Easing is entirely dependent on economic data. A possible tapering of asset purchases may occur when data pointed that US economy was picking up the pace.
Later in the day the United States is expected to release the monthly report on initial jobless claims, followed by a report on producer prices. Also, Markit will announce the flash value of the manufacturing PMI for the US, while the Federal Reserve will publish the results of a survey among manufacturers in the region of Philadelphia.
Elsewhere, the euro was trading steadily against the sterling, as EUR/GBP cross gained 0.06% to trade at 0.8351 at 10:58 GMT. EUR/JPY pair was climbing even more, 0.88% on a daily basis, to trade at 135.63 at 10:59 GMT.