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Forex - EUR/USD little changed after string of PMI reports

Published 07/22/2016, 05:29 AM
Euro holds steady vs. greenback as markets digest ECB inaction
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Investing.com - The euro was little changed against the dollar on Friday, after the release of mostly positive data from the euro zone, as markets were still digesting the European Central Bank’s decision on Thursday to leave monetary policy on hold.

EUR/USD was little changed at 1.1031, still close to Thursday’s one-month trough of 1.0979.

The euro strengthened briefly after ECB President Mario Draghi said on Thursday that European markets weathered the post-Brexit volatility with “encouraging resilience”, but reiterated that the central bank is ready to act by using all the instruments available under its mandate if necessary.

Draghi also said the euro zone recovery faces several headwinds, and the risks remain tilted to the downside, citing the UK referendum, slowing emerging markets and the slow pace of structural reforms as key threats.

The comments came after the central bank left its benchmark interest rate unchanged at a record-low 0.0% in a widely expected move.

Earlier Friday, research group Markit said its Flash Euro Zone Composite purchasing managers index, which measures the combined output of both the manufacturing and service sectors dipped from 53.1 in June to 52.9 in July, above forecasts for 52.5.

In Germany, the manufacturing PMI ticked down to 53.7 in July from 54.5, compared to expectations for a fall to 53.5. The services PMI rose to 54.6 this month from 53.7.

The French manufacturing PMI advanced to 50.0 in July from 49.6, while the services PMI ticked up to 50.3 from 49.9.

The euro was also higher against the pound, with EUR/GBP climbing 0.62% to 0.8386.

In the U.K., Markit said its manufacturing PMI fell to 49.1 in July from a reading of 52.1 in June. Economists had expected the index to fall to 47.8 this month.

Meanwhile, the U.K. services PMI dropped to 47.4 in July from a reading of 52.3 in June, compared to expectations for a decline to 48.9.

The data added to fears over U.K. growth as investors continue to asses the economic effects of the Brexit vote.

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