Today’s manufacturing reports for the Eurozone and its largest economy might have been positive, but with a stream of strong US data increasing the odds of further tapering from the Fed the Euro has fallen against its North American rival.
The Euro slumped against a broadly strengthening ‘Greenback’ as US initial jobless claims were shown to have dipped to a one-month low while US manufacturing expanded at almost the fastest pace for over two years.
After producing a reading of 57.3 in November (the best result since early 2011) the ISM manufacturing gauge eased to 57.0 in December, considerably better than the 56.8 figure expected.
The data also showed that the level of factory employment advanced beyond a two-year high.
As one New York-based economist for Barclay’s Plc observed; ‘The year ended in a pretty bright spot for manufacturing and domestic demand. It shows fairly robust consumption growth and business investment growth in the fourth quarter’.
Meanwhile the Markit US PMI measure came in at 55.0, above the 50 mark separating growth from contraction and up from 54.7 in November.
Construction spending increased 1.0 per cent rather than the 0.6 per cent forecast.
The Euro was already feeling the pressure before the US reports were published as the appeal of higher-risk assets was dented by lacklustre manufacturing data from China.
Signs that the downturn in France is worsening also weighed on the common currency.
Tomorrow influential data releases for the US and Eurozone are a little lacking but Fed Chairman Ben Bernanke’s speech in Philadelphia may trigger EUR/USD movement before the weekend.
Euro (EUR) Exchange Rates
As of 16:45 GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3657 <
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8308 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.5317 <
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6760 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4524 <