The Euro held firm during the Asian session on Thursday and then pushed sharply higher at the European open as technical factors continued to have an important impact. Short-term players managed to push the pair to fresh 2013 highs above 1.38 which was instrumental in triggering further stop-loss gains to just above 1.3820.
The Euro-zone data was weaker than expected as the flash PMI manufacturing reading managed only a marginal gain to 51.3 from 51.1 while there was a significant decline in the services sector index to 50.9 from 52.2. There was also a fragile set of readings for France which increased fears that any Euro-zone recovery would stall very quickly.
Despite dipping sharply following the releases, there was no test of major support levels as dips soon attracted solid Euro buying interest as the currency out-paced global rivals.
The US data releases were mixed with during the day with little impact on interest-rate expectations, although bond yields edged higher. Initial jobless claims declined to 350,000 in the latest week, although this was slightly higher than expected while the delayed job openings data was stronger than expected at 3.88mn from a revised 3.81mn for August.
There was a lower than expected trade deficit at US$38.8bn, little changed from the previous month, while the PMI manufacturing index dipped to the lowest level since April 2012 at 51.1.
The US currency remained generally fragile with a continuation of the pattern seen recently as EUR/USD again proved resilient and resistant to more than very limited corrections. The dollar was more robust elsewhere with notable gains against commodity currencies. USD/CAD continued the strong tone from Wednesday and pushed to the highest level since early September at 1.0425.
The Australian dollar had gained relief from a stronger than expected Chinese flash HSBC PMI reading which hit a seven-month high and this helped offset continuing concerns surrounding rising Chinese money-market rates. AUD/USD stalled below the 0.97 level, however, and dipped sharply to below 0.96 during US trading.
Sterling was initially put on the back foot by another GBP/USD failure to hold above the 1.62 level and selling pressure was compounded by a EUR/GBP move through the 0.8535 resistance area. GBP/USD dipped to lows below 1.6150 before finding some relief as Bank of England MPC member Miles expressed optimism over a self-sustaining recovery. This is potentially significant given his generally dovish stance and GBP/USD rallied back towards 1.62 ahead of Friday’s GDP release.