Investing.com - The euro backed off two-month highs against the dollar on Friday after reports indicated that the U.S. economy may be stabilizing after a recent soft patch.
EUR/USD was down 0.22% to 1.1198 late Friday, still not far from two-month peaks of 1.1289.
The Institute for Supply Management reported that activity in the manufacturing sector was stable in April, after slowing in the five previous months.
The ISM manufacturing index came in at 51.5 in April, matching the March reading, which had been the lowest since May 2013.
Another report showed that U.S. consumer sentiment rose in April to its highest level since January.
Separately, the Commerce Department said construction spending fell 0.6% to an annual rate of $966.6 billion in March, the lowest level since September.
The reports, while mixed, fuelled optimism that the U.S. economy has turned a corner after a recent bout of weakness.
The dollar had received a boost after a report on Thursday showed that the number of Americans filing new claims for jobless benefits fell to a 15-year low of 262,000, pointing to healthy growth in the labor market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.53% to 95.38 late Friday, after falling to two-month lows of 94.47 on Thursday.
Data earlier in the week showed that the U.S. economy grew just 0.2% in the three months to March, slowing from 2.2% in the final quarter of 2014. It was the slowest rate of growth in a year.
The weaker-than-expected data prompted investors to push back expectations on the timing of an initial rate hike by the Federal Reserve to later this year from midyear.
In its rate statement on Wednesday the Federal Reserve said recent indications of a slowdown in growth were probably due to “transitory factors.”
Demand for the euro continued to be underpinned after data on inflation and bank lending earlier in the week added to signs that the recovery in the region is gaining traction.
Sentiment on the single currency was also boosted by hopes that Greece is moving closer to an agreement with its international lenders on a package of economic reforms needed to unlock bailout funds.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report, for a fresh indication on the strength of the economic recovery. Service sector reports from the euro zone will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, May 4
The euro area is to produce revised data on manufacturing activity.
Later in the day, the U.S. is to publish figures on factory orders.
Tuesday, May 5
In the euro zone, Spain is to publish its monthly employment report.
The U.S. is to release trade data, while the Institute of Supply Management is to release a report on service sector activity.
Wednesday, May 6
The euro zone is to publish revised data on service sector activity and a report on retail sales.
The U.S. is to release its monthly ADP nonfarm payrolls report and later in the day Fed Chair Janet Yellen is to speak at an event in Washington DC.
Thursday, May 7
In the euro zone, Germany is to publish a report on factory orders.
The U.S. is to publish the weekly report on initial jobless claims.
Friday, May 8
The U.S. is to round up the week with what will be the closely watched government nonfarm payrolls report.