Strong PMI Data Fails Ignite the Euro
The Euro attempted to break out but was unable to gain traction at higher levels despite stronger than expected services PMI data. The monthly surveys on manufacturing, construction and services have all been stronger than expected. The EU Commission has fined a group of leading multinational banks 1.71 billion Euros for rigging Libor rates in what is the largest antitrust penalty that the commission has ever levied.
The UK Construction PMI printed above 60 on Wednesday but the pound was unable to break through resistance and continued to consolidate at the top end of the current range. The UK services PMI notch up a 60 reading but this result was considered as disappointing. The consensus was for 62 after October’s 62.5. It is the fifth consecutive reading above 60.
In Europe, Markit report that the services PMI rose to 51.2 from 50.9 in the flash, but still down from the 51.6 in October. The German service PMI rose to 55.7 from the 54.5 flash reading and 52.9 in October. France disappointed with a 48.0 reading, down from 48.8 in the flash and 50.9 previously. Italy also disappointed with a 47.2 reading, down from 50.5. New business was softer than expected at 47.0 from 50.7.
The Euro tested support near the 10-day moving average at 1.3560 but quickly moved back to the top end of the range near 1.3600. A close above 1.3650 would lead to a test of the October highs at 1.3820. Momentum is positive with the MACD (moving average convergence divergence) printing in positive territory with an upward sloping trajectory. The RSI (relative strength index) also has an upward trajectory but is printing near 55 which is in the middle of the neutral range.
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