European session review: EUR appreciates after strong Eurozone factory PMI data

EUR strengthened against its major counterparts in the European session on Thursday as the announcement of a massive infrastructure spending plan in the U.S. and the Eurozone's March factory PMI data, which were the strongest on record, bolstered markets’ sentiment.

On Wednesday, U.S. President Joe Biden announced a $2.25 trillion infrastructure spending plan, which includes proposals of a doubling of federal funding for public transportation, $650 billion for clean water and high-speed broadband and more than $500 billion in spending on manufacturing. Biden's infrastructure proposal underscored the recovery narrative, prevailing in markets.

The latest report from IHS Markit revealed on Thursday that the Eurozone's manufacturing sector expanded at a survey record rate in March. According to the report, the final Eurozone manufacturing PMI came in at 62.5 in March, up from February’s 57.9 and the flash reading of 62.4. The March PMI reading indicated that operating conditions in Eurozone’s manufacturing economy improved to the greatest degree in nearly 24 years of survey history. Output and new orders rose at record rates. New export orders also increased for the ninth consecutive month and at a series record pace. In addition, purchasing activity posted the quickest expansion ever and the pace of job creation was the strongest since August 2018.

However, the announcement of a new - third - national lockdown in France reminded investors that the EU struggles in both curbing the spread of the COVID-19 and extending its vaccine rollout. This limits the further growth of the euro.