While most financial markets are still closed for the holidays today, let’s get a head start on figuring out how to trade the economic releases this week. In this edition of my Forex Trading Guide, we’ll take a look at the euzo zone PMI figures due on Wednesday.
What the heck is a PMI?
PMI, which stands for purchasing managers’ index, is basically an indicator of business conditions in an economy. It takes into account the various factors affecting the industry, such as the level of employment, production, new orders, inventories, and deliveries then rolls it up into one neat figure. That makes it easier for traders like you and me to gauge whether businesses are doing well or not.
A PMI reading that is higher than 50.0 means that the industry is expanding. In other words, business is good yo! On the other hand, a PMI reading below 50.0 implies that the industry is contracting.
What is expected for the upcoming release?
After printing weaker than expected PMI readings for March, Germany is expected to show a rebound in its manufacturing and services sectors. Euro zone’s largest economy could show an improvement from 53.7 to 53.9 in its manufacturing PMI and a climb from 53.0 to 53.5 in its services PMI. Meanwhile, France is expected to follow up its strong March figures with subdued gains. The April manufacturing PMI is expected to tick up from 51.8 to 51.9 while the services PMI could hold steady at 51.5.
How could the euro react?
Well, the euro has been surprisingly strong these days despite seeing bleak euro zone economic figures and hearing of potential easing from the ECB. These PMI figures could change all that though if the actual results come in way worse than expected. On the other hand, stronger industry expansion across both manufacturing and services sectors in Germany and France could reduce easing expectations, which might then give the euro a strong boost.
Recommended Content
Editors’ Picks
USD/JPY jumps above 156.00 on BoJ's steady policy
USD/JPY has come under intense buying pressure, surging past 156.00 after the Bank of Japan kept the key rate unchanged but tweaked its policy statement. The BoJ maintained its fiscal year 2024 and 2025 inflation forecast, disappointing the Japanese Yen buyers.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price keeps its range around $2,330, awaits US PCE data
Gold price is consolidating Thursday's rebound early Friday. Gold price jumped after US GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the Fed could lower borrowing costs. Focus shifts to US PCE inflation on Friday.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.