1. Why these PMIs are important
I'm sure you're all fully aware that the euro zone just emerged out of its longest recession in 40 years.Though it's definitely relieving to see the euro zone finally post positive growth, many are still unconvinced about its recovery. After all, growth remains uneven across the region and the economy still faces many headwinds. This partially explains why the markets hardly reacted to news that the economy had grown 0.3% in Q2 2013, exceeding forecasts for a 0.2% expansion.
Now more than ever, markets are interested in seeing how the economy will fair in the coming months. They want confirmation that the rebound we saw last quarter wasn't just a fluke, and the PMIs may just serve that purpose.
Unlike the GDP report, which is a lagging indicator, the PMIs are leading indicators of economic health. What this means is they have stronger implications on future growth and can provide more insight as to whether the recovery is gaining steam in Q3 or if what we saw in Q2 was nothing but a dead cat bounce.
2. How the markets may react
Obviously, if the PMIs out-perform forecasts across the board, it would paint a rosy outlook for the region and would suggest that the recovery has picked up its pace in Q3. That being the case, such results will likely be euro bullish.On the other hand, if all releases show disappointing results, we can reasonably expect the euro to weaken, as it would provide confirmation that the euro zone hasn't exactly gotten out of its rut.
There's also a chance that mixed results could also work against the shared currency if they show uneven growth across the region. For instance, if French and German PMIs show strong results but the euro zone-wide PMIs fail to impress the markets, it would imply highly uneven growth in the region, with weakness in the peripheral countries.
Editors’ Picks
AUD/USD hovers around 0.6500 amid light trading, ahead of US GDP
AUD/USD is trading close to 0.6500 in Asian trading on Thursday, lacking a clear directional impetus amid an Anzac Day holiday in Australia. Meanwhile, traders stay cautious due ti risk-aversion and ahead of the key US Q1 GDP release.
USD/JPY finds its highest bids since 1990, near 155.50
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, testing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming Japanese intervention risks. Focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold price treads water near $2,320, awaits US GDP data
Gold price recovers losses but keeps its range near $2,320 early Thursday. Renewed weakness in the US Dollar and the US Treasury yields allow Gold buyers to breathe a sigh of relief. Gold price stays vulnerable amid Middle East de-escalation, awaiting US Q1 GDP data.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta Platforms Earnings: META sinks 10% on lower Q2 revenue guidance Premium
This must be "opposites" week. While Doppelganger Tesla rode horrible misses on Tuesday to a double-digit rally, Meta Platforms produced impressive beats above Wall Street consensus after the close on Wednesday, only to watch the share price collapse by nearly 10%.
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