The euro strengthened against most major currencies in the early European session on Tuesday, after data showed that Germany’s private sector expanded at the strongest pace in eight months in March.
Data from Markit Economics showed that Germany’s composite Purchasing Managers’ Index rose to 55.3 from 53.8 in February. The growth has stretched to 23 months and the latest rate of expansion was the most marked since July last year.
The PMI for the service sector rose more-than-expected to a six-month high of 55.3 in March from 54.7 in February. The expected score was 55.
The manufacturing PMI came in at 52.4 versus 51.1 in February. The score was above the expected level of 51.5.
The currency showed little reaction to the Eurozone PMI data, that came after German PMI data.
Data from Markit Economics also showed that Eurozone private sector grew at the fastest pace in almost four years in March. The flash composite PMI rose more-than-expected to 54.1 in March from 53.3 in February. The index rose for the fourth consecutive month to reach the highest since May 2011. The reading stayed above the forecast of 53.6.
At 53.3, the average PMI reading for the first quarter was the highest since the second quarter of last year.
The services PMI came in at 54.3 in March, a 46-month high. Economists had forecast the index to rise to 53.9 from 53.7 in February.
Investors are also waiting for progress in Greece’s debt negotiations as Greek Prime Minister Alexis Tsipras meets leaders of Germany’s opposition Left and Green parties later today.
German chancellor Angela Merkel, who held face to face talks with Tsipras for the first time on Monday, said that Greece’s reform proposals would be evaluated by the finance ministers of the euro zone, rather than by Berlin alone.
In the early European session today, the euro rose to more than a 4-week high of 0.7351 against the pound, from an early low of 0.7302. If the euro extends its uptrend, it is likely to find resistance around the 0.76 area.
Against the U.S. and the Canadian dollars, the euro advanced to 6-day highs of 1.0999 and 1.3738 from early lows of 1.0903 and 1.3668, respectively. The euro is likely to find resistance around 1.15 against the greenback and 1.40 against the loonie.
Moving away from early lows of 130.48 against the yen and 1.4246 against the NZ dollar, the euro rose to a 6-day high of 131.40 and a 4-day high of 1.4353, respectively. The euro may test resistance near 136.02 against the yen and 1.49 against the kiwi.
The euro edged up to 1.3952 against the Australian dollar, from an early low of 1.3859. On the upside, 1.42 is seen as the next resistance level for the euro.
Looking ahead, U.S. CPI and new home sales for February, house price index for January and Markit’s manufacturing PMI for March are due in the New York session.
At 5:05 am ET, European Central Bank Vice President Vitor Constancio takes part in a panel discussion titled “The Future of International Monetary Policy and its Impact on Global Economic Recovery” at the International Financial Services Forum, in London. Subsequently, U.S. Federal Reserve Bank of St. Louis President James Bullard is also expected to participate in this panel discussion after an hour.
by RTT Staff Writer
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