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Downbeat euro-area PMI data pushes euro lower, EURUSD trades below $1.37

February 20, 2014

The dollar gained against the euro for the second time in Europe on Thursday after preliminary data showed manufacturing and services activities in the Eurozone expanded at a slower rate than expected in February, underlining concerns over the health of the region's economy. According to data released from market research group Markit, manufacturing Purchasing Managers' Index (PMI) inched down to a seasonally adjusted 53.0 this month from a final reading of 54.0 in January. Services PMI increased to a seasonally adjusted 51.7 in February from a reading of 51.6 in January, yet missing 51.9 expected. In Germany- euro-area's largest economy- the manufacturing sector narrowed growth to 54.7 from 56.5 while services rose to 55.4 from a previous of 53.1. French manufacturing eased expansion to 48.5 from 49.3 in January and services retreated further to 46.9 from 48.9. The euro added to losses against the U.S. dollar, falling 0.29 percent so far, pushing the EURUSD lower to trade at $1.36915, compared to an opening of $1.7315 ahead of the data. The pair fell to a session low of $1.36864. The dollar, which hit a seven-week low against the euro earlier on Wednesday, rebounded after the release of the minutes from the Federal Reserve`s January policy meeting, which showed the U.S. central bank`s plan to reduce its monthly asset purchases remains intact. The dollar index, which tracks the dollar's movements versus a basket of major currencies, climbed to a session high of 80.36 above opening level of 80.20. Investors will be closely watching U.S. jobs data, and January inflation report after weak U.S. data showed U.S. housing starts recorded their biggest drop in almost three years in January. The data heightened fears surrounding the U.S. economy after New York manufacturing and U.S. housing data on Tuesday also disappointed investors. Yen jumped 0.38 percent against the U.S. dollar on Thursday, extending gains for a second session to trade at 101.927 after opening at 102.285. The USDJPY pair so far hit a session high of 102.401 and a session low 101.664.

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Source: Financial Markets

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