When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?
|German/ Eurozone flash PMIs Overview
Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European currency and the related markets as well.
The flash manufacturing PMI for Germany is seen arriving at 43.0 in August, down from July’s 43.2 final print while the index for the services sector is expected to drop to 54.0 this month.
The forecast for the Eurozone flash manufacturing PMI shows 46.2 for August vs. 46.5 seen in the previous month. The Eurozone services sector PMI is seen lower at 53.0 in the reported month vs. 53.2 last.
How could they affect EUR/USD?
“The nation's (Germany) high trade balance surplus is the lion's share of the euro zone's positive balance – and one of the reasons the euro has held up. The common currency has not collapsed despite signs of a slowdown and the European Central Bank's willingness to introduce more monetary stimulus. In other words, speculation is pushing the common currency lower, but exporters keep its bid. Yet when the German industrial export machine stutters – the euro struggles – and so do other European economies. Cross-border supply chains create a dependency on the largest economy,” FXStreet’s Senior Analyst Yohay Elam explains.
Therefore, the spot could break the recent range, opening floors for a test of 1.1027 (two-year lows). A beak above which the EUR/USD pair would target 1.1000 (key psychological support).
Should the data surprise the markets to the upside, the rates could see a bounce towards 1.1115 region (recent upside barriers). Buyers will gain momentum above the last, paving the way for a test of the 20-DMA barrier at 1.1137.
Meanwhile, markets also stay focused on the ECB monetary policy minutes due on Thursday for the next direction. The minutes could offer fresh hints on the ECB’s easing outlook.
At the press time, the EUR/USD pair is seen printing fresh two-day lows near 1.1175 region, modestly flat on the day.
Key Notes
German PMI and ECB Minutes in focus today – TD Securities
EUR Futures: further downside on the cards
EUR/USD forecast: Remains vulnerable to test sub-1.10 level, Euro-zone PMIs in focus
About German/ Eurozone flash PMIs
The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.
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