The Euro weakened against the US Dollar on Tuesday to remain trading close to its lowest-level in three-months as durable goods, service sector and consumer confidence data all came in positively.
The first piece of US data released on Tuesday set the tone for a positive run of US reports.
Durable goods orders in the US unexpectedly rose in April, marking a third consecutive month of gains. The Commerce Department said that orders for durable goods increased by 0.8% last month.
The cause for the rise was an increased demand for defence goods such as warplanes. Excluding defence goods demand would in fact have fallen by 0.8%.
A separate report offered more support after Markit’s report showed that the US service sector expanded in May at the fastest pace seen since March 2012.
The flash Services Purchasing Managers Index came in at 58.4, higher than the previous month’s figure of 55.0. A figure above 50 indicates expansion whilst one below means expansion.
“May’s flash services PMI survey is a further signal that the US economy has regained momentum through the second quarter of the year,” said a senior economist at Markit.
The US Dollar was also supported by a report released by the Conference Board which showed that consumer confidence in the US rose to 83 in May, matching economist forecasts. The figure is higher than April’s number of 81.7.
The Euro meanwhile remains under pressure from comments made by European Central Bank President Mario Draghi. Addressing a conference in Portugal yesterday Mr Draghi warned that a deflationary cycle could begin in the Eurozone.
Investors raised their bets that the ECB will introduce new monetary easing measures at next week’s policy meeting.
Also weighing upon the Euro was the success of Eurosceptic parties in last week’s Euro elections. The success of UKIP in the UK raised investor worries over a British exit from the Eurozone. Victory for the far right National Front in France and victories for anti-EU parties in Denmark and Greece added to concerns.
Euro Exchange Rate News:
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