EU Markit PMIs Preview: Coronavirus overshadows data

Markit will publish this Friday at 08:00 GMT the preliminary estimates of its August indexes. EU August activity is expected to remain in expansion territory in August but speculative interest can’t ignore the sharp increase in coronavirus outbreaks in Europe. EUR/USD weighed by a resurgent dollar, but the slump remains corrective, FXStreet’s Chief Analyst Valeria Bednarik reports.

Key quotes

“The EU Manufacturing PMI is foreseen at 52.9 from the previous 51.8, while the Services PMI is expected at 54.5 from 54.7. The Composite Index has been forecast at 54.9, unchanged from July final reading.”

“The expected numbers for the whole of Europe and countries, in particular, are all expected to remain within expansion territory. However, there’s more than just the numbers. The record slumps seen earlier this year are a consequence of the coronavirus pandemic, which is far from over.  Fears over what will happen next will likely outweigh encouraging reports. Speculative interest is far more concerned about what’s next, with the possibility of another setback. The market needs more than a positive number to be convinced the worst is over.”

“Upbeat readings could help EUR/USD recover towards the 1.1956 high, with the downside restricted as long as the pair remains above 1.1770. The corrective decline may extend below this one, mainly exacerbated by additional profit-taking ahead of the weekend. The next relevant support comes at 1.1690, where the pair bottomed this month.”