The euro gained in late trade as the worse than expected performance of the US Institute of Supply Management's (ISM) generated a sell-off in dollars almost across the board. At 1720, the euro was worth USD1.0832, while against sterling it was also ahead, rising to STG0.6872. With dollar/yen's down side limited by the threat of Japanese official intervention, the market sought to sell yen against euros, which further contributed to euro's rise this afternoon. The ISM's survey of purchasing managers in the manufacturing sector showed that manufacturing activity barely expanded in February. The overall index of business activity fell to 50.5 in February from 53.9 in January.
The decline was bigger than expected, and takes back most of the five-and-a-half-point December surge in the index. The euro is still within its recent range, however, as it has failed to break the USD1.0850 barrier that has stood for the past three weeks. Dealers said that the market was on balance eager to add to long euro positions, but has been waiting for a break through the recent upside of the range before taking action. Analysts said the 1.0860 area is key. //www.fxcentre.com