Euro Strengthens After Solid Eurozone PMI
August 22 2019 - 2:10AM
RTTF2
The euro was higher against its most major counterparts in the
early European session on Thursday, as the euro area private sector
expanded more than forecast in August, reducing fears over
recession.
Flash survey data from IHS Markit showed that the composite
output index rose unexpectedly to 51.8 in August from a 3-month low
of 51.5 in July. Economists had forecast a score of 51.2.
The services Purchasing Managers' Index improved to 53.4 from
53.2 a month ago.
German private sector expanded in August, with the flash
composite output index rising to 51.4 from July's 50.9.
Economists had forecast to index to drop to 50.6.
Investors await the European Central Bank's minutes of the July
policy meeting due shortly. The minutes could provide more insights
about the possible stimulus measures that had been suggested in its
last meeting at Frankfurt.
The currency has been trading lower against its major
counterparts in the Asian session, excepting the pound.
The euro strengthened to a 9-day high of 1.0920 versus the
franc, from a low of 1.0875 seen at 2:30 am ET. The next possible
resistance for the euro is seen around the 1.12 level.
Having dropped to 1.1076 against the greenback at 2:15 am ET,
the euro reversed direction and advanced to a 3-day high of 1.1113.
The euro is poised to find resistance around the 1.14 level.
The European currency bounced off to 118.30 against the yen,
from a 2-day low of 117.74 hit at 2:15 am ET. On the upside, 121.00
is likely seen as the next resistance level for the euro.
Survey results from IHS Markit showed that Japan's private
sector grew at the fastest pace in eight months in August driven by
services activity.
The Jibun Bank flash composite output index rose to 51.7 in
August from 50.6 in July. A score above 50 indicates expansion.
The single currency appreciated to an 8-day high of 1.7404
against the kiwi and a weekly high of 1.6420 against the aussie
from Wednesday's closing values of 1.7311 and 1.6346, respectively.
If the euro rises further, 1.78 and 1.66 are seen as its next
resistance levels against the kiwi and the aussie,
respectively.
The euro that closed Wednesday's trading at 1.4728 against the
loonie rose to 1.4766. The euro is likely to face resistance around
the 1.50 level.
In contrast, the euro was a tad weaker against the pound, with
the pair trading at 0.9132. The euro is seen finding support around
the 0.93 level.
Looking ahead, the European Central Bank will release accounts
of the monetary policy meeting of the Governing Council held on
July 24-25 at 7:30 am ET.
Canada wholesale sales for June, U.S. weekly jobless claims for
the week ended August 17 and leading index for July will be
featured in the New York session.
Eurozone flash consumer sentiment index for August is set for
release at 10:00 am ET.
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