The euro moved marginally higher against the US dollar on Tuesday as investors digested the latest reports on manufacturing activity within the eurozone. Positive readings for a number of manufacturing purchasing managersâ indexes reflected improving conditions for the sector in Germany, France, and the European Union.
IHS Markit, a research institute that releases monthly reports on economic activity within major economies, said today that the eurozone manufacturing purchasing managersâ index rose to 58.6 in October. The index had a reading of 58.1 in September, while analysts expected a reading of 57.8 for the current month.
The data was based on a survey conducted by IHS Markit that included more than 300 business executives in the manufacturing sector. Readings above 50 reflect improving conditions in the sector, while readings below 50 show deterioration.
The German manufacturing purchasing managersâ index also beat estimates in October with a reading at 60.5 against expectations of 60.2. The index edged slightly lower from 60.6 in September. Meanwhile, the French manufacturing activity index hit 56.7 this month from 56.1 last month, despite forecasts pointing to a reading at 56.0.
IHS Markit attributed improving manufacturing conditions in the eurozone to a higher number of new orders as export growth picked up from September. The research institute stated that new orders accelerated for the third consecutive month in Germany to reach the highest level since April 2011. Job creation also increased to reach its best level in more than a decade in the eurozone, while Germany had the strongest hiring rate since May.
However, the services sector fell behind, as indexes of activity in the sector fell to 54.9 and 55.2 in the eurozone and Germany from 55.8 and 55.6 last month, respectively. Meanwhile, the French services purchasing managersâ index rose to 57.4 from 57.0.
Todayâs gains for the euro appeared to be muted ahead of tomorrowâs German business climate report and the latest interest rate decision from the European Central Bank on Thursday. Investors expect the bank to keep interest rates unchanged, but a statement that follows the decision may contain hints on the timing of monetary stimulus tapering.
EUR/USD traded at 1.1758 as of 13:35 GMT on Tuesday after touching 1.1767 at 11:20 GMT, the pairâs highest level today. EUR/USD began trading today at 1.1755. EUR/GBP climbed to 0.8938, the strongest level since October 20, after starting the day at 0.8903.
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