Better the expected economic data managed to push the EURUSD back higher during the European session after falling sharply during the Asian session last Friday. It seems that heightened risk tolerance continues to hold the EURUSD pair above the 1.4100 handle.
It all began at 3 pm GMT, when nation specific purchasing managers� index (PMI) started coming out. First up was the French flash manufacturing PMI. It came out at 47.9, an improvement from the 46.6 consensus. The German manufacturing PMI also showed signs that confidence was starting to come back to businesses It rose to an 11-month high at 45.2. Economists were only anticipating a reading of 42.1. The PMI assesses the general outlook of businesses engaged in the manufacturing by using a 0-100 scale. A reading above 50 means that the manufacturing industry is expanding. Even if results on the PMI last Friday were all lower than 50, the underlying trend is upwards, indicating that the recession�s grip on euro zone�s economy is slightly easing.
The German Ifo business climate report for July, which measures the general sentiment of German manufacturers, builders, wholesalers and retailers toward the economy, also exacerbated EUR gains. It climbed the fourth consecutive time, printing 87.3, better than the 86.6 initially expected.
Looking ahead, euro zone�s economic slate is relatively light. In any case, the Gfk German consumer climate report for July, which surveys consumers on their overall sentiment towards the economy, is due later at 6 am GMT. It is predicted to print 2.9, same as last reporting period�s reading. Following at 8 am GMT is euro zone�s June M3 money supply. The total quantity of currency probably rose by 3.6%, economists said. As for EUR price action, unless risk tolerance surprises once again, we might see the currency continue its range bound motion for today and for the rest of the week.