The Euro continued to edge broadly higher on Tuesday following the release yesterday of unexpectedly upbeat manufacturing data from the Eurozone. According to the Markit flash PMI report, the manufacturing sector’s reading ticked higher to 52.7 from the previous month’s 51.6, above the consensus estimate of 51.9. Germany, the Eurozone’s economic powerhouse, also had much improved numbers which bode well for the Eurozone as a whole, with a reading in December of 54.2, well above the consensus estimate of 53.0 from 52.7.
With the uncertainty for the dollar’s direction continuing to weigh, the EUR/USD traded at $1.3762, holding on to Monday’s gains and staying with striking distance of last week’s 2-year peak o $1.3811. The EUR/JPY also traded up at 114.80 Yen, while the EUR/GBP ticked higher to 0.8443 pounds.
ECB Decision
Yesterday, the head of the ECB reconfirmed the central bank’s position that it would continue to keep interest rates low for a while, stressing the fragility of some of the Eurozone economies. Indeed, even France, the number two economic driver in the Eurozone, fell short of analysts’ expectations with its preliminary reading of the manufacturing sector at only 47.1 for December, down from 48.4. That, along with Draghi’s statement, helped to temper any potential gains.