Euro Higher As Eurozone Factory Activity Expands
February 01 2018 - 2:12AM
RTTF2
The euro advanced against its major opponents in the European
session on Thursday, as Eurozone manufacturing activity expanded
strongly at the start of the year, driven by solid expansions of
both production and new orders.
Survey data from IHS Markit showed that the final factory
Purchasing Managers' Index dropped to a three-month low of 59.6 in
January from December's record high of 60.6. However, any reading
above 50 indicates expansion in the sector.
Manufacturers indicated that they were experiencing solid
inflows of new business from both the domestic and export markets
during January.
In Germany, the manufacturing PMI dropped to a 3-month low of
61.3 in January from 63.3 in December.
Nonetheless, the latest reading still signaling one the greatest
improvements in overall business conditions since the survey began
in 1996.
French manufacturing activity also continued to expand strongly
in January. The final PMI came in at 58.4 versus 58.8 in
December.
Meanwhile, Italy's manufacturing growth quickened to a near
seven-year high in January. The Purchasing Managers' index climbed
to 59.0 from 57.4 in the previous month.
The currency has been trading in a positive territory in the
Asian session, with the exception of the greenback.
The single currency spiked up to near a 4-week high of 136.52
against the yen, after having dropped to 135.44 at 5:00 pm ET. The
euro is seen finding resistance around the 138.00 level.
The latest survey from Nikkei showed that Japan manufacturing
sector continued to expand in January, and at a faster rate, with a
Manufacturing PMI score of 54.8.
That's up from 54.0 in December, and it moves further above the
boom-or-bust line of 50 that separates expansion from
contraction.
The euro advanced to 1.2451 against the greenback and 1.1607
against the franc, off its early 2-day low of 1.2386 and 3-day low
of 1.1549, respectively. If the euro rises further, it may target
resistance around 1.26 against the greenback and 1.18 against the
franc.
Reversing from an early low of 1.5261 against the loonie, the
euro edged up to 1.5323. The next possible resistance for the euro
is seen around the 1.55 level.
The euro climbed to a 2-day high of 1.6938 against the kiwi and
a 1-1/2-month high of 1.5557 against the aussie, off its early lows
of 1.6830 and 1.5394, respectively. Continuation of the euro's
uptrend may see it challenging resistance around 1.72 against the
kiwi and 1.57 against the aussie.
On the flip side, the euro fell to a weekly low of 0.8717
against the pound and held steady thereafter. This may be compared
to a high of 0.8757 hit at 1:30 am ET. The euro is poised to find
support around the 0.86 mark.
Data from the IHS Markit/CIPS showed that UK manufacturing
logged further easing at the start of 2018, falling to its lowest
level since June last year, but sustained its robust momentum.
The manufacturing PMI fell to 55.3 from 56.2 in December.
Economists had predicted a score of 56.5.
Looking ahead, U.S. weekly jobless claims for the week ended
January 27, construction spending for December and ISM
manufacturing index for January are set for release in the New York
session.
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