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Forex - Euro close to 11-month lows vs. dollar after PMI data

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Investing.com -

Investing.com - The euro eased against the dollar on Thursday but remained close to 11-month lows after data showed that euro zone private sector activity slowed in August, adding to fears that the recovery in the region is faltering.

EUR/USD was last up 0.05% to 1.3265 after falling as low as 1.3242 earlier, the weakest level since September.

The pair was likely to find support at about the 1.32 level and resistance at around 1.3285.

Activity in the euro zone's manufacturing sector slowed to a 13 month low in August, with the euro zone manufacturing PMI down to 50.8 from 51.8 in July. Economists had forecast a decline to 51.3.

The region's services PMI slid to 53.5 from 54.2 in July, in line with forecasts.

Activity in Germany's factor sector slowed but remained solid, with the German manufacturing PMI down to 52.0 from 52.4 in July. The country's services PMI ticked down to 56.4 from 56.7 last month.

Manufacturing activity in France contracted for a sixth successive month, with the French manufacturing PMI falling to a 15-month low of 46.5, but the country's services PMI improved to 51.1.

"The region remains on course to register growth of only around 0.3%-0.4% in the third quarter, a level that is unlikely to stimulate any real turnaround in the labor market." Chris Williamson, chief economist at survey compiler Markit said.

The weak data added to pressure on the European Central Bank to implement fresh measures to shore up the recovery in the euro area after it cut rates to record lows in June.

Demand for the dollar continued to be underpinned after Wednesday's minutes of the Federal Reserve's July meeting showed that some officials believe the strengthening recovery and ongoing improvement in the labor market supports a move towards tightening monetary policy.

Other officials want to see further evidence of economic recovery before moving towards raising rates.

Investors were looking ahead to a speech by Fed Chair Janet Yellen in Jackson Hole on Friday for further indications on the possible future direction of monetary policy.

Elsewhere, EUR/JPY was up 0.19% to 137.81, off lows of 137.47.

Earlier Thursday, a report showed that manufacturing activity in Japan accelerated in August, indicating that the economy is stabilizing after a sharp contraction in the second quarter, due to a sales tax hike.

Another report showed that China's HSBC manufacturing index fell to a three month low of 50.3 in August, fuelling fresh fears over a slowdown in the world's largest economy.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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