US and European PMI data sends Dollar in two directions

  • Markit Purchasing Managers' Indexes in the US weaken unexpectedly, following sharp declines in Europe
  • Dollar rises against the euro, falls versus the yen
  • Eurozone manufacturing moves into recession

Concerns about the direction of the global economy roiled the dollar as the business outlook in the United States faded and Europe's tilted towards recession. 

European purchasing managers indexes for March from the UK firm Markit were far weaker than expected with manufacturing moving deeper into contraction in the Eurozone, Germany and France.  

The euro responded immediately falling from 1.1388 to 1.1317 in the first 15 minutes after the release of the French data and proceeding below 1.1300 as the Eurozone and Germany statistics were made public.

The US currency lost ground against the Japanese Yen as US Treasury yields moved down in response to damaging economic data. The 10-year Treasury lost 10 points (10:57 am EDT) to 2.44%, its lowest return in over a year and the 2-year shed 8 basis points to 2.33%.

French manufacturing PMI for March came in at 49.8, missing the 51.5 forecast and falling beneath the 50 division for the second time in four months.  December’s reading was 49.7.  The Eurozone March PMI of 47.6 also slipped the 49.5 consensus estimate and followed February’s 49.3 score. 

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The biggest surprise was in Germany, Europe’s largest economy and manufacturing leader where the PMI index dropped to 44.7, far below the 48.0 forecast and February’s 47.6 level, for the third straight negative month.

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Manufacturing in the United States also faltered but it has farther to fall from its excellent performance of the last two years and remains securely in expansion.

The purchasing managers’ index dropped to 52.5 in March from 53.0 in February. The forecast was for a slight gain to 53.6.

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