The euro is stronger, and up 0.8% as it retraces yesterday’s decline and is supported by a general improvement in data given stronger services PMIs and better than expected retail sales for the euro area. Both Germany and the euro area’s services PMIs improved from the July 24th advance, coming in at 50.3 and 47.9, respectively. However, the euro has remained on a downward trend over the course of the week, and today’s rally has yet to retrace Wednesday’s open.
Stronger-than-expected service data also fueled the risk-on trading session, which sent the dollar plummeting.
In U.S. trading on Friday, EUR/USD was trading up 1.50% at 1.2364, up from a low of 1.2167 and off from a high of 1.2371.
The pair was likely to find support at 1.2167, the earlier low, and resistance at 1.2401, the high from July 6.
The U.S. economy added a net 163,000 net nonfarm payrolls in July, far more than market expectations for a gain of 100,000 and well above June's revised figure of 64,000.
The news sparked a global rally for risk in which investors ditched the greenback for higher-yielding currencies and equities. Meanwhile, the Institute of Supply Management's service-sector index outpaced expectations last month as well.
In a report, the Institute for Supply Management said that its non-manufacturing purchasing managers' index rose to a seasonally adjusted annual rate of 52.6 in July, up from 52.1 in June.
Investors next week will have one eye on China's monthly data deluge and another on auctions of "safe" U.S. and German 10-year government bonds. However, uppermost in their minds will be the ECB's step toward both government bond-buying that may be a turning point in the euro saga and launching quantitative easing in Europe to match the United States, Britain and Japan.
What's more, China's release of inflation, production, credit and trade data for July next week - particularly if that picture is very weak - could well prompt monetary easing there too that links up with Western policy initiatives as speculation rises about a concerted response to what is now a worldwide slowdown.
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