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Forex News: Euro Higher As Eurozone Factory Activity Expands

Euro Higher As Eurozone Factory Activity Expands

02/01/2018 - 07:12:00 (RTTNews)

(RTTNews) - 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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