EUR/USD Rises as US Data Leaves Sour Taste

EUR/USD rose today as economic data from the United States was nowhere as good as was expected, making traders doubt if the Federal Reserve will indeed reduce its asset purchases next month. Such doubts were negative for the dollar. The US currency was rising for the first three days of the week, but sharply declined yesterday and with today’s drop is heading to a weekly loss.
Both housing starts and building permits rose in July in line with forecasts. Housing starts were at the seasonally adjusted annual rate of 896k, up from the June’s 846k. Building permits were at the seasonally adjusted annual rate of 943k, rising from the previous month’s reading of 918k. (Event A on the chart.)
Nonfarm productivity increased at the 0.9% annual rate during the second quarter of 2013. This is compared to the consensus forecast of 0.5%, the same as the first quarter’s growth (revised from 0.7%). (Event A on the chart.)
Michigan Sentiment Index slipped from 85.1 in July (revised from 83.9) to 80.0 in August, according to the preliminary estimate. Economists have anticipated an increase to 85.6. (Event B on the chart.)

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