Euro Climbs As German PMI Advances To 6-yr High, European Shares Rally
May 23 2017 - 12:24AM
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The euro strengthened against its major rivals in the early
European session on Tuesday, after data showed that German private
sector growth improved to a 73-month high in May and as European
stocks advanced in the wake of rally in technology and banking
shares.
Flash data from IHS Markit showed that Germany's private sector
expanded at the sharpest rate in over six years in May.
The composite output index rose unexpectedly to a 73-month high
of 57.3 in May from 56.7 in April. The expected reading was
56.6.
The flash manufacturing Purchasing Managers' Index climbed to
59.4 from 58.2 in April, while it was forecast to drop to 58.0.
Separate survey showed that Eurozone manufacturing Purchasing
Managers' Index rose to a 73-month high of 57.0 from 56.7 in April.
The expected score was 56.5.
The flash composite output index came in at 56.8 in May,
unchanged from April's six-year high. The score was forecast to
fall slightly to 56.7.
Survey data from Ifo institute showed that German business
sentiment strengthened more than expected in May.
The business sentiment index rose to 114.6 from 113.0 in April.
The expected reading was 113.1.
European shares rose despite the news of an appalling terrorist
attack in the north of the U.K. and lack of progress on Greek debt
talks.
Campaigning has been suspended in Britain's national election
after an explosion struck an Ariana Grande concert in northern
England late Monday, killing at least 19 people and injuring dozens
in what police were treating as a terrorist attack.
The euro showed mixed performance in the Asian session. While
the euro rose against the greenback and the pound, it held steady
against the franc. Against the yen, the euro was lower.
The euro advanced to 1.1268 against the greenback, its strongest
since November 2016. This may be compared to a low of 1.1222 hit at
2:35 am ET. If the euro-greenback pair extends rise, 1.14 is likely
seen as its next resistance level.
The euro reversed from an early low of 124.56 against the
Japanese yen, climbing to a 6-day high of 125.38. On the upside,
the euro is likely to target 126.00 as the next resistance
level.
Preliminary data from IHS Markit showed that Japan's
manufacturing activity expanded at the weakest pace in six months
in May.
The Nikkei Flash Manufacturing Purchasing Managers' Index, or
PMI dropped to 52.0 in May from 52.7 in April.
The single currency firmed to near a 2-month high of 0.8674
against the pound, after having fallen to 0.8639 at 5:00 pm ET.
Continuation of the euro's uptrend may see it challenging
resistance around the 0.88 region.
The euro bounced off to 1.5200 against the loonie, 1.5036
against the aussie and 1.6035 against the kiwi, from its early low
of 1.5132 and multi-day lows of 1.4960 and 1.5955, respectively.
The next possible resistance for the euro is seen around 1.53
against the loonie, 1.53 against the aussie and 1.62 against the
kiwi.
On the flip side, the 19-nation currency edged down to 1.0925
against the Swiss franc, from a high of 1.0944 hit at 11:30 pm ET.
The euro is likely to target 1.08 as the next support level.
Figures from the Federal Customs Administration showed that
Switzerland's foreign trade surplus decreased in April, as exports
fell and imports rose.
The trade surplus shrank to CHF 1.9 billion in April from CHF
3.0 billion in the previous month.
Looking ahead, U.S. new home sales for April and Markit's flash
manufacturing PMI for May as well Canada wholesale sales for March
are set for release in the New York session.
At 3:00 pm ET, Minneapolis Fed President Neel Kashkari
participates in a panel discussion about building economic
well-being through home-ownership at the Center for Indian Country
Development, in Minneapolis.
Philadelphia Fed President Patrick Harker speaks about the
economic outlook at the Harvard Club, in New York at 5:00 pm
ET.
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