Forexpros – The euro extended gains against the U.S. dollar on Thursday, climbing to a fresh session high after weak U.S. manufacturing data but the single currency remained vulnerable amid concerns over sovereign debt contagion to core euro zone economies.
EUR/USD hit 1.3540 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.3522, gaining 0.44%.
The pair was likely to find support at 1.3360, the low of October 10 and resistance at 1.3640, Tuesday’s high.
The euro added to gains after official data showed that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in November.
Risk appetite was boosted earlier after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week fell to a seven-month low.
The number of individuals filing for initial jobless benefits in the week ending November 11 fell by 5,000 to a seasonally adjusted 388,000, confounding expectations for an increase to 395,000.
But the single currency’s gains were capped after Spanish 10-year bond yields surged to a euro-era high of 6.97% at an auction of government debt, close to the 7% threshold widely seen as unsustainable in the long term.
Meanwhile, French 10-year bond yields also climbed to their highest level since the inception of the single currency, adding to fears over sovereign debt contagion to core euro zone economies.
In Italy, Prime Minister Mario Monti outlined a broad raft of policy measures aimed at restoring investor confidence, including reform of the country’s pension and taxation system as well as labor market reforms.
The euro was fractionally higher against the pound, with EUR/GBP inching up 0.04% to hit 0.8559.
Also Thursday, official data showed that the number of building permits issued in the U.S. rose more-than-expected in October, climbing 9.2% to a seasonally adjusted 0.65 million, the highest level since March 2010.
Analysts had expected building permits to rise 1.6% to 0.60 million units in October.
U.S. housing starts were largely unchanged in October, holding steady at a seasonally adjusted 0.63 million, compared to expectations for a decline to 0.61 million.
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