Investing.com - The euro turned lower against the dollar on Friday as uncertainty over when the Federal Reserve will start to pull back its stimulus measures dented market sentiment.
EUR/USD hit session lows of 1.3312 before settling at 1.3326, 0.14% lower for the day and paring back the week’s gains to 0.26%.
The pair is likely to find support at 1.3200 and resistance at 1.3400, the high of August 8.
Safe haven demand for the dollar was boosted on Friday after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.
Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.
The data came amid ongoing speculation over how soon the Federal Reserve will start to phase out its bond buying program. Fed Chairman Ben Bernanke has said that the decision to begin tapering the bank’s USD85 billion-a-month asset purchase program will depend on whether economic data is strong enough.
Expectations that the Fed may begin tapering as soon as September were boosted on Thursday after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. fell to the lowest level since January 2008 last week, dropping by 15,000 to 320,000.
The single currency remained supported after data on Wednesday showed that the euro zone economy returned to growth in the second quarter, exiting an 18-month recession.
Eurostat said the euro zone’s economy expanded by 0.3% in the three months to June. Economists had expected quarter-on-quarter growth of 0.2%. France’s economy expanded 0.5%, following two consecutive quarters of contraction, while Germany’s economy expanded by a larger than forecast 0.7%.
The euro ended the week higher against the yen, with EUR/JPY gaining 0.70% to settle at 130.09.
In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will be closely watched.
Manufacturing and service sector data from the euro zone will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 19
In the euro zone, Spain is to hold an auction of 10-year government bonds.
Tuesday, August 20
Germany is to produce data on producer price inflation, a leading indicator of consumer inflation.
Wednesday, August 21
The U.S. is to publish private sector data on existing home sales, a leading indicator of economic health. In addition the Federal Reserve is to publish the minutes of its most recent policy setting meeting.
Thursday, August 22
The euro zone is to release preliminary data on manufacturing and service sector activity in the region, while Germany and France are to release individual reports.
The U.S. is to release the weekly government report on initial jobless claims.
Friday, August 23
The U.S. is to round up the week with data on new home sales, a leading indicator of economic health.
EUR/USD hit session lows of 1.3312 before settling at 1.3326, 0.14% lower for the day and paring back the week’s gains to 0.26%.
The pair is likely to find support at 1.3200 and resistance at 1.3400, the high of August 8.
Safe haven demand for the dollar was boosted on Friday after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.
Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.
The data came amid ongoing speculation over how soon the Federal Reserve will start to phase out its bond buying program. Fed Chairman Ben Bernanke has said that the decision to begin tapering the bank’s USD85 billion-a-month asset purchase program will depend on whether economic data is strong enough.
Expectations that the Fed may begin tapering as soon as September were boosted on Thursday after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. fell to the lowest level since January 2008 last week, dropping by 15,000 to 320,000.
The single currency remained supported after data on Wednesday showed that the euro zone economy returned to growth in the second quarter, exiting an 18-month recession.
Eurostat said the euro zone’s economy expanded by 0.3% in the three months to June. Economists had expected quarter-on-quarter growth of 0.2%. France’s economy expanded 0.5%, following two consecutive quarters of contraction, while Germany’s economy expanded by a larger than forecast 0.7%.
The euro ended the week higher against the yen, with EUR/JPY gaining 0.70% to settle at 130.09.
In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will be closely watched.
Manufacturing and service sector data from the euro zone will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, August 19
In the euro zone, Spain is to hold an auction of 10-year government bonds.
Tuesday, August 20
Germany is to produce data on producer price inflation, a leading indicator of consumer inflation.
Wednesday, August 21
The U.S. is to publish private sector data on existing home sales, a leading indicator of economic health. In addition the Federal Reserve is to publish the minutes of its most recent policy setting meeting.
Thursday, August 22
The euro zone is to release preliminary data on manufacturing and service sector activity in the region, while Germany and France are to release individual reports.
The U.S. is to release the weekly government report on initial jobless claims.
Friday, August 23
The U.S. is to round up the week with data on new home sales, a leading indicator of economic health.