Euro at 2-week lows vs dollar despite upbeat data from euro area

Euro at 2-week lows vs dollar despite upbeat data from euro area

5 August 2015, 10:33

The euro was at 2-week lows against the greenback on Wednesday despite data showing that service sector activity in the euro area rose unexpectedly in the last quarter. The dollar was meanwhile supported after the Fed official said the rate hike may take place as early as September.

EUR/USD hit 1.0866, the lowest level since July 21, before consolidating at 1.0867, down 0.13%.

Euro zone service sector activity rose unexpectedly in the last quarter, industry data showed on Wednesday. In a report, research group Markit said that Euro Zone Services PMI rose to 54.0, from 53.8 in the preceding quarter. Analysts had expected Euro Zone Services PMI to remain unchanged at 53.8 in the last quarter.

Germany’s services sector grew at the same above-average pace last month as in June, with the PMI coming in at 53.8, unchanged from June. A reading above 50 indicates expansion; a reading below points to contraction in business activity.

France's services sector has slowed, with the PMI dropping to 52 last month from 54.1 in June and Italy’s services PMI has also come in lower than expected with a reading of 52 for July, from 53.4 in June (a 12-month high). Encouragingly, however, the country's new business sub-index rose to 53.7 from 52.7.

The greenback was supported after Atlanta U.S. Federal Reserve Bank President Dennis Lockhart said in an interview with the Wall Street Journal that the Fed was "close" to being ready to raise short-term rates.

Lockhart noted it would take major weakness in the data to convince him not to move.

"I think there is a high bar right now to not acting, speaking for myself," he said. The Atlanta Fed president is a voting member on rate policy this year. He is seen by Fed watchers as a key bellwether of the thinking of the majority on the U.S. central bank due to his pragmatic approach to economic issues. Lockhart is the second Fed official in as many days to come out in favor of a rate liftoff next month.

St. Louis Fed President James Bullard said in a WSJ interview released on Monday that he was in favor of a move after the Sept. 16-17 meeting.

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