Forex - Euro trims losses against dollar

The euro trimmed losses against the dollar on Thursday, as better-than-forecast euro zone data buoyed the single currency, but the dollar remained supported after July’s Federal Reserve minutes indicated that the bank is on track to start tapering this year.

EUR/USD pulled back from 1.3298, the lowest since August 15, to hit 1.3341 during U.S. morning trade, still down 0.11% for the day.

The pair was likely to find support at 1.3250 and resistance at 1.3363, the session high.

The dollar remained broadly stronger after Wednesday’s minutes of the Fed’s July meeting showed that officials were "broadly comfortable" with plans to start unwinding the bank’s USD85 billion-a-month bond buying program.

However, officials remain divided over the timing of possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate. 

The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken.

Data on Thursday showed that U.S. initial jobless claims rose more-than-expected last week, but remained close to six-year lows.

The Department of Labor said the number of people who filed for unemployment assistance in the U.S. last week rose by 13,000 to a seasonally adjusted 336,000, slightly higher than forecasts for 330,000.

The single currency remained supported above the 1.33 level after data showed that manufacturing activity in the euro zone expanded at the fastest pace in 26 months in August.

The flash euro zone manufacturing purchasing managers’ index rose to 51.3 from a final reading of 50.3 in July. Analysts had expected the index to inch up to 50.8.

Meanwhile, the flash euro zone services PMI rose to a 24-month high of 51.0 from 49.8 in July, better than expectations for a reading of 50.2.

Germany’s manufacturing PMI rose to a 25 month high of 52.0, while the country’s services PMI rose to a six-month high of 52.4.

This offset data showing that the French manufacturing PMI remained unchanged at 49.7 in August, while the French services PMI declined to a two-month low of 47.7.

Elsewhere, the euro was higher against the pound, with EUR/GBP up 0.35% to 0.8557 and was close to session highs against the yen, withEUR/JPY advancing 0.85% to 131.55.