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Forexpros – The euro edged higher against the U.S. dollar in Asian trade Friday, following data showing a smaller than expected contraction in the U.S. manufacturing sector.
EUR/USD hit 1.4256 in early Asian trade, the pair’s lowest since August 19; the pair subsequently consolidated at 1.4267, rising 0.01%.
The pair was likely to find support at 1.4151, the low of August 12, and resistance at 1.4549, Monday’s high.
Earlier Thursday, the U.S. Institute of Supply Management reported that its index of purchasing managers fell to 50.6 in the month of August from 50.9 the month before.
Economists had forecast the ISM index of purchasing managers, to retreat to 48.5 in August.
The ISM index of manufacturing prices dropped to 55.5 in August from 59.0 in July, still signifying contraction but at a slower rate than the market expectation of a fall to 55.0 for the last month.
The ISM index of purchasing managers reflects the amount of U.S. manufacturing activity that took place in the previous month, while the index of manufacturing prices represents business sentiment towards future inflation.
“The overall sentiment is one of concern and caution over the domestic and international economic environment, which is affecting customers’ confidence and willingness to place orders, at least in the short term,” said Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee after release of the data.
U.S. stocks broke a five day winning streak, as the Dow Jones Industrial Average lost 1.03% to close the day at 11,493.60, the Nasdaq Composite Index declined 1.3% to 2,546.04, and the S&P 500 was lower by 1.19% to finish at 1,204.42.
Meanwhile in a separate report from European market research group, Markit Economics, the manufacturing purchasing manager’s index for the euro-zone fell to 49.0 in August, below market expectations of retention of the previous month’s figure of 49.7.
European markets closed mixed in Thursday trade, with France’s CAC 40 climbing 0.28% to 3,265.83, Britain’s FTSE 100 up by 0.45% to 5,418.65, and Germany’s DAX lower by 0.94% to end the session at 5,730.63.
Meanwhile, the euro was higher against the British pound but down against the Japanese yen, with EUR/GBP up by 0.01% to hit 0.8813, and EUR/JPY falling 0.06% to hit 109.61.
Market players were expected to focus on the release of data on U.S. non-farm payrolls as well as the most recent unemployment numbers, due out later Friday from the Bureau of Labor Statistics.
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