Euro to Dollar (EUR/USD) Exchange Rate Lower as US Manufacturing Sector Expands

May 22, 2014 - Written by John Cameron

STORY LINK Euro to Dollar (EUR/USD) Exchange Rate Lower as US Manufacturing Sector Expands

Although the Federal Open Market Committee’s fairly dovish meeting minutes wore on the US Dollar yesterday, the Euro lost ground against its North American rival on Thursday.

The Euro experienced modest fluctuations following the release of a mixed bag of PMI reports for the Eurozone and its largest economies.

While the German and Eurozone service sectors performed well, the pace of growth in the manufacturing sectors slowed and France recorded unexpected contraction.

Meanwhile, the ‘Greenback’ was later boosted by positive US manufacturing data.

The Markit manufacturing PMI for the US came in at 56.2 in May, up from 55.4 in April and considerably better than the reading of 55.5 expected by economists.

Markit representative Paul Smith said of the result; ‘The US manufacturing sector continued to gain strength heading into mid-year as supportive demand conditions led to the sharpest month-on-month increase in production for over three years, This provides further confirmation that industry will aid a rebound in US GDP in the second quarter, and other indicators from the survey suggest that the sector has plenty of momentum heading into the summer and beyond.’

The report detailed an increase in payrolls and a record climb in purchasing activity as well as an increase in work on new/existing orders.

Other economic releases for the UK were less upbeat.

The initial jobless claims figure showed a stronger-than-anticipated surge in applications for unemployment benefits in the week ending May 17th.

The previous week’s initial jobless claims number was revised to 298,000. However, continuing claims did drop to their lowest level since the end of 2007.

Meanwhile, US existing home sales were up by 1.3 per cent in March, month-on-month, less than the 2.2 per cent increase expected.

Tomorrow EUR/USD movement could be occasioned by German growth figures and the US new home sales report.

If the German economy is shown to have expanded at a faster-than-forecast rate in the first quarter the Euro could recover ground.

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