PMI Misses Hit Sentiment
The Euro is under pressure today on the back of a slew of weaker-than-forecast PMI data this morning. French, German and overall eurozone PMIs were seen flashing a sea of red today, highlighting fresh weakness in the single market economy. German manufacturing data was seen plunging deeper into contractionary territory last month, as was eurozone manufacturing data. The decline in German data last month means that the composite PMI is now back below the neutral 50 level, pointing to a forthcoming GDP contraction. Given the softening risk environment we’re seeing, the near-term risks certainly look skewed to the downside.
ECB Easing Expectations
With both eurozone manufacturing and service sector readings seen falling further last month, the HCOB composite PMI now sits at 50.1, barely in positive territory. Marking its lowest level for five months, the decline in eurozone private sector data makes for troubling reading for the ECB. Indeed, September rate cut pricings have jumped on the back of the release, now sitting above 65%. Given Lagarde’s recent reaffirmation that any further rate moves will be data dependent, traders are looking at today’s data as a strong signal that further easing will be announced at the next meeting. Traders will now be paying close attention to Lagarde, who speaks on Thursday, for any dovish signals in response to this data which will drive EUR deeper down, if seen.
Technical Views
EURUSD
The rally in EURUSD has stalled for now into a test of the 1.0937 level resistance, capped by the bear channel highs just above. With momentum studies weakening, a further correction looks likely with 1.0724 the next support level to note.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.