Daily Brief, Nov 22: Economic Events Outlook – Brace for Flood of Eurozone PMIs

Happy Friday, traders.

The last day of the week is likely to be very volatile in the wake of a series of high impact economic events from Euro zone and peer nations. The dollar trimmed lower versus other main currencies as traders focused on the latest progress in a bitter 16-month long trade conflict between the United States and China that has weighed on the world economy.

US Officials respond to the Chinese invitation with a willingness to meet in person. However, they did not commit to a date yet; they also said that they would be reluctant to travel for talks unless China gave clear statements to make commitments on intellectual property protection, forced technology transfer, and agricultural purchases.

On the data front, at 18:30 GMT, the US unemployment claims for this week exceeded the expectations of 215K and came in as 227K and gave pressure to the US dollar. At 20:00 GMT, the CB Leading Index came in at -0.1%, which was as expected. The existing home sales also gave pressure to the US dollar when it came in at 5.46M against the expectations of 5.49M. Let’s now take a look at critical economic events today.

Watchlist – Economic Events Outlook

The European economy is due to release a series of economic events, which mainly include the Manufacturing and Services PMI data.

What is PMI?

Firstly, let me help you understand what these PMI figures are. PMI stands for Purchasing Managers’ Index, and it’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

Derivation & Impact
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. Purchasing managers are the initial people to react to slow market conditions, as they reduce demand if they feel less optimistic or uncertain about the economy.

The PMI figures have a standard threshold of 50. Above 50.0 indicates industry expansion, below symbolizes contraction. So today, all the PMI figures that come below 50 are going to weigh on the single currency Euro. Brace yourselves.

French Flash Manufacturing PMI – The figure is due at 8:15 GMT with a forecast of 50.9 vs. 50.7 during the previous month.

French Flash Services PMI – Besides the French Manufacturing PMI, the services PMI will be observed. It’s expected to soar slightly to 53 vs. 52.9

German Flash Manufacturing PMI – The data will be released at 8:30 GMT, around 15 minutes after France’s figures. Germany is one of the biggest business hubs of the Eurozone, but it’s been struggling with the manufacturing figures. Since Q4 2018, the PMI figures are staying below 50, which show slacks in the German manufacturing sector. Even now, in 2019, the German manufacturing PMI has dropped gradually from 49.9 in January to 41.9 in October.
The economy is expected to show a slight surge in PMI figure from 42.1 to 42.9, which is likely to support the single currency Euro.

German Flash Services PMI – On the other hand, Services PMI is scheduled with a forecast of 52.0, slightly above the previous month’s figure of 51.6.

Flash Manufacturing PMI – At 9:00 GMT, Markit is due to release Flash Manufacturing PMI with a positive forecast of 46.4 vs. 45.9 during the prior month. Although it’s below 50, it may not place any significant impact on the market as speculators have already priced in the 45.9 figure. By any means, if the number crosses over 50, we may see some excellent price action in Euro today.

Flash Services PMI – Alongside the flash services, PMI stays over 50 and is expected to be 50.1. It’s slightly above the previous month 50 but may not place any significant impact on the market.

US Dollar – USD

Flash Manufacturing PMI – Besides Eurozone, the US economy is also due to report flash manufacturing PMI figures at 14:45 GMT. The United States is struggling with its PMI figures lately, perhaps in the wake of the US-China trade war. Even the current month’s PMI figure is expected to be 51.5, which is far lower than 54.9 at the beginning of 2019.

We may notice no reaction in case the figure comes out at 51.5. However, a drop below this figure can trigger sell-off in the dollar today as investors will start trading dollar with stronger Fed rate cut sentiments.

Good luck today, and see you soon with the next update!