- Manufacturing PMIs from European economies easily beat forecasts
- Services readings turn out to be equivocal
- Euro outperforms its peers and rebounds sharply in the aftermath
In a run up to a slew of PMI releases scheduled for today, there were some concerns pertaining to a possible slowdown which could have translated into a pause of the ongoing economic improvement across the old continent. Having said that, one could notice that ominous guesswork fortunately proved to be wrong. In effect, the euro has clearly bounced off a support zone which we’ve mentioned recently.
Cutting to the chase, the manufacturing backdrop still appears to outpace the services sector. The German manufacturing reading showed a sharp rise from 58.1 to 59.4, the Eurozone’s release marked an increase from 56.6 to 57.4, whereas the French print for manufacturing rose from 54.9 to 55.8. All indicators fairly easily beat forecasts, for that reason we’ve had a noticeable jump in the EURUSD as the upbeat outlook for the ongoing economic improvement seems to be left intact.
PMIs from the Eurozone and Germany marked an increase in August, except for the services print for the Eurozone. Source: Bloomberg, XTB Research
The services data was a bit worse but didn’t deliver disappointments as well. To be honest, just the German release managed to mark a jump rising from 53.1 to 53.4. Remaining two prints from France as well as the Eurozone fell short of estimations. The French reading reported a decrease from 56 to 55.5 (55.8 was expected) while the Eurozone’s figure pointed to a fall from 55.4 to 54.9 (lack of a change was anticipated).
By and large, the data is reassuring for sure as there have been no signs heralding a downturn in economic growth in the foreseeable future. On top of that, one could assume that yesterday’s dismal data from the ZEW survey as for expectations might have been just a negligible shift as PMIs are supposed to offer much more relevant input for us. In addition, better moods across European companies could suggest that Draghi might offer more leeway for the euro.
The EURUSD is increasing quite sharply as the PMI readings seem to buttress the ongoing solid economic recovery. It’s worth mentioning that the pair has respected a level we’ve pointed out of late. Source: xStation5