Daily Brief, Nov 6: Economic Events Outlook – Eurozone’s Services PMI in Focus
Arslan Butt • 2 min read
Good morning, traders.
The US dollar exhibited dramatic gains on Wednesday, especially versus conventional safe-haven assets such as gold and Japanese yen. It looks like traders tried to do profit-taking in gold and other safe-haven assets on growing bets for a US-China trade agreement and a series of robust US economic figures.
A survey on the broad US services division issued on Tuesday showed that business sentiment had recovered in October from a three-year low in September. Besides, the ISM non-manufacturing area index advanced to 54.7 from 52.6 in September, surpassing market expectations.
The recovery in the economic figure is a good indication for dollar bulls as a decline in the index would have implied that depression in trade war-hit manufacturers was affecting the service division also.
On the economic calendar, we have a series of low impact economic events that are not expected to trigger significant price action but are still worth watching for any surprises.
Watchlist – Economic Events Outlook
German Factory Orders m/m – 7:00 GMT
Destatis is due to release German factory orders figures during the early European session. Fellas, it’s a leading indicator of production – rising purchase orders signal that manufacturers will increase activity as they work to fill the orders.
German factory orders report a change in the total value of new purchase orders placed with manufacturers. Economists are expecting a positive figure this month, as the orders are expected to increase by 0.1% vs. -0.6% drop during the previous month.
Services PMI – What’s that, and how can it impact the market?
For all the newbies, the PMI stands for Purchasing Managers’ Index, and it’s a survey of about 300 purchasing managers, which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories.
Moreover, the data is positively correlated with interest rates – early in the economic cycle, an increasing supply of money leads to additional spending and investment, and later in the cycle, expanding money supply leads to inflation.
Threshold – The PMI figure of above 50 is considered suitable for the economy and vice versa.
Spanish Services PMI – 8:15 GMT
The Spain services sector has been performing well despite slacks in the manufacturing sector. This month, economists are expecting a slight from 53.3 to 52.8.
Italian Services PMI – 8:45 GMT
Despite the worst manufacturing PMI figures from Italy, the services sector is performing better. This month’s figure is expected to show a slight drop in PMI to 51.0 vs. 51.4 beforehand. But still, the overall data is above 50, which indicates industry expansion and may keep Euro supported today.
French Final Services PMI – 8:50 GMT
Economists are not expecting any change from France’s Final Services PMI data as it’s expected to be 52.9 vs. 52.9 last month.
German Final Services PMI – 8:55 GMT
Markit is releasing German data with a neutral forecast of 51.2. No significant impact is expected on the release.
Eurostat is due to the release of retail sales figures at 10:00 GMT. The data shows a change in the total value of inflation-adjusted sales at the retail level. Moreover, It’s the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
As per economists’ forecast, the data is expected to report a weaker retail sales of 0.1% vs. 0.3% figure.
Overall, the economic events remain in favor of single currency Euro, and these may keep Euro supported unless they miss forecast. That’s it for now, see you guys with another update soon. Good luck!