EUR/USD edges lower on mixed Euro zone economic data

EUR/USD edges lower after a string of mixed economic data was released out of the Euro zone on Monday. The countries in the Euro zone provided mixed signals to the market players.

EUR/USD reached a session low at 11:30 GMT to trade at 1.3526, after which consolidation followed at 1.3540. The pair was trading at 1.3546 at 14:40 GMT, losing 0.33% on a daily basis.. Support was likely to be received at November 26th low, 1.3521, while resistance was to be encountered at November 29th high, 1.3622.

On Monday, a string of Euro zone leading indicators was released. Germany and Italy expanded their manufacturing activity, while France and Spain disappointed again, with their manufacturing output contracting. However, the manufacturing PMI for the whole Euro area outperformed.

On Monday, Spanish manufacturing activity declined at the fastest pace in six months in November, which reinforced fears about the economic outlook ahead of the Spanish economy. Spain is the 4-th largest Euro zone economy. The market research group Markit, reported that its final PMI for Spain contracted to a seasonally adjusted 48.6 in November from a preliminary reading of 50.9 in October. The index is based on a survey among managers in the manufacturing industry, conducted by the London-based Markit Economics research group. Analysts projections pointed to a rise in the index to reach a value of 51.0 in November. A manufacturing PMI reading above 50.0 indicates industry expansion, while a lesser value indicates contraction.

According to Andrew Harker, Senior Economist at Markit: “The latest PMI survey highlights the current fragility of the Spanish manufacturing sector, with the domestic market the key source of weakness.”

Meanwhile, Italian manufacturing activity expanded at the fastest pace since June 2011, relieving concerns about the economic outlook over the third-largest Euro zone economy. In a report the market research group Markit said that the final Italian manufacturing PMI advanced to a seasonally adjusted 51.4 in November, compared to a preliminary value of 50.7 the previous month. The data outstripped analysts estimates, which pointed a reading of 50.9 in November.

France, meanwhile, was the only country to report faster declines in both output and new orders. The French final manufacturing PMI, showed a contraction in manufacturing activity, with the index coming in at a reading of 48.4 in November. However, the value was higher than analysts estimates of 47.8.

The German manufacturing activity expanded in November to the highest level since June 2011. The final manufacturing PMI in the largest Euro zone economy rose to 52.7, slightly higher than the preliminary value and analysts expectations, which pointed to a reading of 52.5.

The rising German manufacturing activity, helped the Euro-area to outweigh the initial estimates about its manufacturing PMI in November. The index in the region rose to 51.6 in November, compared to a preliminary value of 51.5. Experts had expected that the index will remain at 51.5.

Chris Williamson, chief economist at Markit, cited by Bloomberg, said: “Manufacturing across the region is enjoying its best performance for two and a half years, but the pace of growth remains only modest. The data suggest that output is rising at a quarterly rate of only around 0.6 percent in the fourth quarter so far.”

According to a Bloomberg News survey of 22 economists, the European economy will expand 0.2 percent this quarter and 0.3 percent in the first three months of 2014. Euro-area economic growth slowed to 0.1 percent in the third quarter after a 0.3 percent gain in the previous three months.

Meanwhile, the US final manufacturing PMI advanced to a seasonally adjusted 54.7 in November, up from a preliminary reading of 54.3 and compared to 51.8 in October, according to data by Markit Economics.

Elsewhere, having reached a session high at 1.6442 at 00:25 GMT, the highest level since August 2011, GBP/USD traded at 1.6388 at 10:57 GMT, gaining 0.10% for the day. Support was likely to be received at November 29th low, 1.6315, while resistance was to be encountered at August 29-th 2011 high, 1.6454.

USD/JPY reached a session high at 102.67 at 8:32 GMT, gaining 0.20% for the day. On Friday, USD/JPY reached the highest level since May 23rd, to trade at 102.61. Support was likely to be found at November 29th low, 102.12, while resistance was to be seen at May 23rd high, 103.56.