Forexpros – The euro rose to a fresh session high against the U.S. dollar on Tuesday, as market sentiment was boosted by a report showing that manufacturing activity in the U.S. expanded at the fastest pace since June last month.
EUR/USD hit 1.3068 during U.S. morning trade, the pair’s highest since December 28; the pair subsequently consolidated at 1.3066, rallying 1.02%.
The pair was likely to find support at 1.2917, Monday’s low and resistance at 1.3118, the high of December 22.
The Institute for Supply Management said its index of purchasing managers rose by 1.2 points to 53.9 in December from 52.7 in November.
Analysts had expected the ISM PMI to ease up by 0.5 points to 53.2 in December.
Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee said, “Manufacturing is finishing out the year on a positive note, with new orders, production and employment all growing in December at faster rates than in November, and with an optimistic view toward the beginning of 2012 as reflected by the panel in this month’s survey.”
Sentiment on the euro was boosted earlier after a report showed that the number of unemployed people in Germany fell more-than-expected in December, while the country’s jobless rate dropped to a record low.
The data came a day after a report indicating a slowdown in the rate of contraction in the manufacturing sector in the euro zone last month.
Data showing that Chinese manufacturing activity expanded in December after contracting the previous month also lent support to higher yielding assets.
But worries over sovereign debt issues in the euro zone lingered, with Italian 10-year bond yields hovering just below the critical 7% threshold, as investors looked ahead to bond auctions by Germany and France later in the week to gauge borrowing conditions in the region.
The euro was also higher against the pound, with EUR/GBP rising 0.33% to hit 0.8366.
Later Tuesday, the U.S. Federal Reserve was to publish the minutes of its December policy-setting meeting.
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