Investing.com - The dollar firmed against the euro on Wednesday after a manufacturing barometer for the New York State area came in much stronger than expected and confirmed market expectations for the Federal Reserve to scale back monthly bond purchases this year.
In U.S. trading, EUR/USD was trading at 1.3594, down 0.61%, up from a session low of 1.3581 and off a high of 1.3699.
The pair was likely to find support at 1.3549, Thursday's low, and resistance at 1.3685, Monday's high.
The dollar firmed against the euro and most other major currencies after data revealed that manufacturing activity in the New York State expanded at the fastest pace since May 2012 this month.
The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December. Analysts were expecting the index to rise to only 3.75.
Elsewhere, U.S. wholesale prices beat expectations and firmed the dollar further.
The U.S. producer price index rose 0.4% in December, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier.
Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.
The solid data convinced investors that the Federal Reserve will wind down its USD75 billion in monthly bond purchases this year.
Bond purchases weaken the dollar by driving down long-term interest rates, and talk of their dismantling tends to strengthen the greenback.
Wednesday's economic indicators were the latest convincing investors that the poor December jobs report was likely a hiccup on the road to recovery.
On Tuesday, the Commerce Department reported that U.S. retail sales rose 0.2% in December, beating expectations for a 0.1% increase.
Core retail sales, which exclude automobile sales, expanded by 0.7% in December, well above forecasts for a 0.4% increase.
The figure convinced investor to look past data revealing the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase.
Meanwhile in Europe, data revealed the euro zone’s trade surplus widened to EUR16.0 billion in November from a surplus of EUR14.3 billion in October, largely due to a decline in imports. Analysts had expected the trade surplus to widen to EUR16.7 billion.
Elsewhere, Germany’s Federal Statistics Office reported earlier the economy expanded by just 0.4% in 2013 after increasing by 0.7% in 2012, as the crisis in the euro zone acted as a drag on growth. Analysts had been expecting growth of 0.5%.
The euro was down against the pound, with EUR/GBP sliding 0.10% to 0.8312, and down against the yen, with EUR/JPY trading down 0.39% 142.02.
On Thursday, the euro zone is to release data on consumer inflation, while Spain is to hold an auction of 10-year sovereign bonds.
The U.S. is to publish reports on consumer price inflation and initial jobless claims, in addition to data on manufacturing activity in Philadelphia. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington.
In U.S. trading, EUR/USD was trading at 1.3594, down 0.61%, up from a session low of 1.3581 and off a high of 1.3699.
The pair was likely to find support at 1.3549, Thursday's low, and resistance at 1.3685, Monday's high.
The dollar firmed against the euro and most other major currencies after data revealed that manufacturing activity in the New York State expanded at the fastest pace since May 2012 this month.
The Federal Reserve Bank of New York said that its general business conditions index jumped to 12.51 in January from an upwardly revised 2.22 in December. Analysts were expecting the index to rise to only 3.75.
Elsewhere, U.S. wholesale prices beat expectations and firmed the dollar further.
The U.S. producer price index rose 0.4% in December, the biggest increase since June, recovering from a 0.1% decline in November and was 1.2% higher from a year earlier.
Core PPI was up 0.3% in December and rose 1.4% on a year-over year basis, compared to expectations for a monthly increase of 0.1% and an annual gain of 1.3%.
The solid data convinced investors that the Federal Reserve will wind down its USD75 billion in monthly bond purchases this year.
Bond purchases weaken the dollar by driving down long-term interest rates, and talk of their dismantling tends to strengthen the greenback.
Wednesday's economic indicators were the latest convincing investors that the poor December jobs report was likely a hiccup on the road to recovery.
On Tuesday, the Commerce Department reported that U.S. retail sales rose 0.2% in December, beating expectations for a 0.1% increase.
Core retail sales, which exclude automobile sales, expanded by 0.7% in December, well above forecasts for a 0.4% increase.
The figure convinced investor to look past data revealing the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase.
Meanwhile in Europe, data revealed the euro zone’s trade surplus widened to EUR16.0 billion in November from a surplus of EUR14.3 billion in October, largely due to a decline in imports. Analysts had expected the trade surplus to widen to EUR16.7 billion.
Elsewhere, Germany’s Federal Statistics Office reported earlier the economy expanded by just 0.4% in 2013 after increasing by 0.7% in 2012, as the crisis in the euro zone acted as a drag on growth. Analysts had been expecting growth of 0.5%.
The euro was down against the pound, with EUR/GBP sliding 0.10% to 0.8312, and down against the yen, with EUR/JPY trading down 0.39% 142.02.
On Thursday, the euro zone is to release data on consumer inflation, while Spain is to hold an auction of 10-year sovereign bonds.
The U.S. is to publish reports on consumer price inflation and initial jobless claims, in addition to data on manufacturing activity in Philadelphia. Meanwhile, Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington.