Euro PMIs point to 'growing dichotomy in performance' between Germany and France

The Euro has received a modest leg up this morning following the release of what we consider to be a highly encouraging set of Euro Area PMI figures.

We think that the most salient aspect of the data is the growing dichotomy in performance between the bloc’s two largest economies: Germany and France.

Somewhat sooner than we had anticipated, activity in Germany for the first time appears to be reaping the rewards of the government’s massive stimulus package.

The turbulent political landscape in the latter, on the other hand, seems to be weighing heavily on business sentiment in France, which this month slumped to its lowest level since February.    

All things considered, the data should help relieve the burden on the European Central Bank to lower rates again any time soon. Next week’s Governing Council meeting looks likely to be largely a non-event, and we see effectively no chance of either a change in policy or a tweak in the communications that could herald further cuts ahead.