EU Manufacturing and Service Data – Watch the Tide Turn
Skerdian Meta • 2 min read
Good morning FXML followers, here we are back again updating you with the latest forex related events and of course commenting and interpreting their impact on the forex market. This morning we had the Eurozone manufacturing and services PMI data.
If you remember last month, the same data came out better than expected but not anything great; the numbers were around the 52 level but they were still praised as good enough to signal a possible turnaround in the economic tide for the EU. Only a few days later we had that unnamed ECB source commenting about starting a tapering process, which means the end of the beginning of the asset purchase from the ECB for their QE programme.
The Euro jumped more than 100 pips on a few unconfirmed reports only. Now imagine if the ECB was to change the monetary policy for real, imagine they announce tomorrow that they will start tightening the policy after buying more than 1 trillion Euros worth of assets in about two years. The currents would change and the Euro downtrend would reverse and turn into an uptrend.
This morning´s manufacturing and service numbers were another step in the right direction. The German and French manufacturing sectors performed much better than expected last month and the German service sectors beat the expectations too. I guess a chunk of the British financial industry would come in handy for France, hence the latest hard line comments from French president Hollande regarding Brexit.
The EU 28 data for these two sectors was quite positive too. at around 53, the PMI indicator shows that the manufacturing and service sectors in the EU are not far from great. When the UK and the US were posting economic data at 55-56 PMI a year ago, these economies were considered as running at almost full speed.
If we receive such numbers for the Eurozone, then don´t be surprised if the tide turns for the Euro pairs. It might not happen tomorrow, but the ECB will start changing their tone and the market sooner or later will accept it. That would be the right time to buy the Euro.