The euro continued trading higher against the US dollar on Thursday, despite that the number of initial jobless claims in the United States dropped more than projected, while the index of producer prices met expectations, as the common currency was still supported by comments made by European Central Bank President Mario Draghi earlier in the day.
EUR/USD rose to daily highs at 1.3477 at 11:35 GMT, after which consolidation followed at 1.3466, gaining 0.20% for the day. Support was likely to be received at November 13th low, 1.3391, while resistance was to be seen at November 15th high, 1.3505.
It became clear that the number of people who filed for unemployment assistance in the United States decreased by 21 000 to reach 323 000 during the week ending on November 16th 2013, or the lowest number since September. Expectations pointed that the number of claims will fall less, to 335 000. Last week contained a national holiday, as during such days the number of submitted claims is lower than usual. The average number of claims during the past four weeks, an indicator considered as lacking seasonal effects, dropped by 6 750 to 338 500.
At the same time, the number of claims, submitted in a period of over one week, which refers to people who have already been receiving jobless benefits, climbed by 66 000 to reach 2.88 million during the week ending on November 9th.
Additionally, the index of producer prices, which gauges the change in all expenditures made by companies during the process of production, was reported to have dropped 0.2% in October compared to the previous month, in line with expectations, due to weaker demand that suppresses inflation rate in the United States. In September producer prices dipped 0.1%. The core producer price index, which excludes volatile components such as costs of food and energy products, gained 0.2% in October on a monthly basis, following the 0.1% uptick in September. In annual terms, the index of producer prices climbed a mere 0.3% in October, meeting preliminary estimates and retaining the rate of increase, demonstrated in September.
The index of consumer prices in the country also recorded a drop in October, by 0.1%, as reported earlier. Both producer and consumer price inflation are indicators closely watched by the Federal Reserve Bank, as they play a major role in determining the future course of monthly monetary stimulus, which tends to curb longer-term interest rates and also aims to stimulate spending, employment and economic growth.
However, both annual producer and consumer price indexes remained still below central banks objective of an annualized inflation rate of 2%.
Meanwhile, 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 Germany’s 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.
Also, speaking in Germany today, European Central Bank President Mario Draghi played down speculation, that the bank was actively considering whether to impose negative interest rates on deposits. He said that such a measure has only been discussed at central banks last policy meeting.
Elsewhere, the euro was steady against the pound, with EUR/GBP cross rising 0.08% on a daily basis to trade at 0.8353 at 14:17 GMT. EUR/JPY pair advanced 1.12% to trade at 135.95 at 14:18 GMT.