The euro lost ground against the US dollar on Monday, as markets awaited the release of the report on Pending Home Sales out of the United States.
EUR/USD hit a session low at 1.3534 at 8:30 GMT, losing 0.2% on a daily basis. Support was likely to be found at November 22nd low, 1.3463, while resistance was to be encountered at November 22nd high, 1.3558.
Earlier today, at 7:45 GMT, the results of the French Business Survey were released. The Business Survey actually measures the French industrial activity on a monthly basis. The data is gathered by a survey of around 4 000 French business leaders from a wide range of industrial sectors. A lower reading of the indicator should be considered as negative for the common currency, the EUR, while a higher than expected reading should be taken as positive for the EUR. Today the indicator reached 98 for November and remained unchanged from the previous month reading, but had beaten the forecasts of the analysts, who predicted a value of 97. This actually confirms that the expectations about the French business climate are steady and are slightly improving, after hitting the bottom in October last year.
Benoît Cœuré, a member of the Executive Board of the European Central Bank (ECB), today on a Tokio forum, explained the ECB decision to lower the main interest rate was taken to counter the low inflation in the Euro zone and not because of deflationary expectations. His exact words were: “We hadnt taken the decision, because we see deflationary risk in the Euro zone, but mainly our actions were in connection with the hope to maintain enough tolerance for the inflation rate above the zero level.” The ECB announced its readiness to intervene again, after decreasing the main interest rate earlier this month to a record low of 0.25% in an attempt to raise the inflation rate, because it is a way under the desired 2% for price stability.
Meanwhile, the greenback received a certain support at the end of last week, after the Department of Labor said 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.
Also, Markit Economics reported on November 21st, that the index, gauging manufacturing activity in the United States, rose to a reading of 54.3 in November, according to preliminary data, which marked an eight-month high. The final value of the manufacturing PMI came in at 51.8 in late October. Values above the key level of 50.0 are indicative for expansion in activity.
Later in the day, at 15:00 GMT, the National Association of Realtor’s (NAR) will release a report on pending home sales in the United States, an indicator for the future housing market activity. The median estimate of experts pointed a 2.0% gain in October compared to a month ago, after in September sales declined 5.6%. Better than projected results will certainly provide support to greenback’s demand.
EUR/AUD pair was gaining 0.32% for the day to trade at 1.4833 at 7:57 GMT. EUR/CHF was also trading little changed at 1.2299 at 8:39 GMT, gaining 0.02% on a daily basis.