Stock Market Watch

Forex Market Update: Euro Gains Against Dollar After PMI Data

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The euro climbed to a one-month high against the U.S. dollar on Wednesday after an economic survey showed that euro zone’s manufacturing activities expanded sharply in July; however, any further gains are unlikely since the European Central Bank (ECB), through its ‘forward looking guidance” has already hinted at the continuation of accommodating policy.

The ECB President Mario Monti in his latest interest rate policy statement (announced in early July), had said that the bank will continue to adopt accommodating policy and probably further slash benchmark interest rates in order shore up the euro zone’s economy.

The euro-zone’s purchasing manager’s index (PMI) climbed its 18-month high level in July. The Index stood at 50.4, compared to 48.7 in June.

Separately, PMI from both Germany and France also rose more-than-expected; prompting investors to cut bets against the common currency.

Following the data releases, the euro edged up to trade at $1.3255, a level not recorded since June 21.

According to Reuters, traders said that stop loss was triggered after the euro/dollar pair breached $1.3050.

“The PMI data has pushed the euro up … But we are still short euros as ultimately euro/dollar is a relative monetary policy play. A rise above $1.33 is a sell,” said Barclay’s currency strategist, Chris Walker, according to Reuters.

At last check, the euro gained 0.16% to trade at $1.31245.

Against the yen, the dollar was up 0.60% to trade at yen100.03.

The dollar index, a gauge on U.S. unit’s performance against a basket of six major traded currencies, was mainly flat at 82.0.3.








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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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