EUR/USD has climbed sharply, pushing above the 1.34 line for the first time in almost a year. The euro was boosted by strong releases out of Germany and the US. German PMIs were solid, and US Unemployment Claims easily beat the market estimate. The parade of strong German data continued on Friday, as German Ifo Business Climate climbed to an eight-month high. US releases wrap up the week with New Home Sales.
- Asian session: Euro/dollar gained ground, breaking above 1.34 and climbing to 1.3419. The pair consolidated at 1.3413. Euro/dollar is unchanged in the European session.
- Current range: 1.3360 to 1.3480.
- Below: 1.3360, 1.34, 1.3360, 1.3290, 1.3255, 1.3170, 1.3130, 1.3110, 1,3030, 1.30, 1.2960 and 1.28.
- Above: 1.3480, 1.36, 1.3750 and 1.3838.
- 1.34 has reverted to a support position. This line is weak. 1.3360 is the next support line.
- On the upside, 1.3480 is next, providing strong resistance.
Euro/dollar higher after positive German, US data– click on the graph to enlarge.
- 9:00 German Ifo Business Climate. Exp. 103.1 points. Actual 104.2 points.
- 15:00 US New Home Sales. Exp. 387K.
For more events and lines, see the Euro to dollar forecast
- Euro responds to German, US numbers: The euro flexed some muscle after solid releases out of Germany and the US on Thursday. German PMIs were excellent, as both Services and Manufacturing PMIs easily beat the market forecast. Manufacturing PMI climbed to 48.8 points, beating the estimate of 47.7 points. This was the key manufacturing index’s best showing since February. Services PMI looked even better, climbing to 55.3 points. This easily exceeded the forecast of 52.0 points, and was the highest level seen since May 2011. The news was just as upbeat across the pond, as US Unemployment Claims were red hot for a second straight week. The number of claims fell to 330 thousand, crushing the estimate of 359 thousand. Almost lost in the crowd was an outstanding release from Eurozone Current Account, which posted a surplus of 14.8 billion euros. The estimate stood at just 6.5 billion. The euro made the most of the excellent numbers, and has padded over a cent since early Thursday, as it trades above the 1.34 line.
- Euro PMIs point to mixed picture: The euro jumped after Eurozone PMIs were released, but a careful reading of the data shows that the news wasn’t all positive. German Manufacturing PMI did beat the market estimate, but remains below the 50 level, pointing to further contracting in the German Manufacturing Sector. French numbers were weak, with both Services and Manufacturing PMIs posting readings in the low-40 range. Both PMIs were well below market expectations. Eurozone PMIs were somewhere in the middle, as both the Services and Manufacturing PMIs beat the estimates. However, both indexes fell below the 50 line, pointing to continuing contraction in the Eurozone services and manufacturing sectors.
- German Numbers Improve: After some weak releases earlier in January, German numbers have shown some life. ZEW Economic Sentiment soared to its highest level since May 2010, and Thursday’s solid PMIs gave a sharp boost to the euro. The week wrapped up on a high note, as German Ifo Business Climate climbed to 104.2 points, its best showing since last May. The estimate stood at 103.1 points. The positive readings from the Eurozone’s largest economy will be welcome news to markets hungry for good news. In order for the Eurozone to get back on its feet, it is critical for the German locomotive to get back on track.
- Greece receives more bailout funds: At a meeting on Monday in Brussels, the Eurogroup of Eurozone Finance Ministers approved the next installment of bailout funds for Greece, in the amount of 9.2 billion euros. This tranche is made up of EUR 7.2 billion in bonds, to recapitalize Greek banks, and EUR 2 billion in cash for government expenses. The decision boosted market sentiment, as the move was seen as a vote of confidence by the ECB in the ability of Greece to carry on with its economic restructuring program.
- US data continues to zig-zag: Trying to gauge the extent of the US economic recovery is no simple task, especially when US releases point in all directions. The employment situation appears to be improving, as the Unemployment Claims indicator has looked outstanding for the past two weeks. Retail Sales also has looked sharp. On the other hand, we continue to see sluggish manufacturing and consumer sentiment data. As well, the most recent housing numbers fell below the estimate. With the US economic indicators sending mixed signals about the extent of the recovery, the uncertainty is likely to be reflected in the currency markets.