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EURUSD Trends Higher On PMI Manufacturing Data

James Boston
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EURUSD Trends Higher On PMI Manufacturing Data

The Purchasing Managers Index (PMI) for the Eurozone has been released by Markit economics for the month of October. The finalized figures for the month are generally mixed but overall slightly improved on expectations. The headline Eurozone PMI has just been announced at 50.6, this came in slightly behind the market consensus estimate of 50.7 but represents a pick on the fourteen month low of 50.3 experienced in September.

One of the strongest recoveries this month came in the data from the Eurozone’s largest economy. The final German PMI number for October has been released as 50.4, this reading is significant as it not only brings an end to a recent downward trend in the sector but it also takes the indicator back above the crucial 50 figure which demarcates the difference between contraction and expansion. September’s reading was just 49.9 and there was an expectation in the market that this index would rise as high as 50.8 on this latest release. Markit Economics pointed to the fact that firms in the German manufacturing sector reported an acceleration in output growth over the month and that consequently they have been adding to their workforce numbers at the strongest pace in almost three years.

There are no doubt mixed signals coming from the German industrial sector at the moment, despite a mild, but welcome, expansion for the month, there is very evident weakness in the sector. Firms surveyed by Markit Economics reported a fall off in new business for the second month in a row citing the impact of Russian sanctions as a contributing factor. More significantly however is the reported drop off in domestic demand, this raises a question mark around the strength of the German manufacturing sector at the moment, more importantly it’s ability to sustain any measurable growth over the near term.

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