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Eurozone PMI Figures Improve

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The Eurozone Purchasing Managers (PMI) Index for February has just been published at 53.2, this is an improvement on consensus expectation of 53.0 and but slightly down on the previous figure of 54.0**

Additionally 4 separate European countries have posted their February PMI figures this morning. Spain narrowly beat expectation at 52.5. Italy provided a minor disappointment at 52.3. The French figures however contained the biggest positive surprise, at 49.7 France beat consensus by 1.2 and moved closer to the key 50 level that denotes the difference between contraction and expansion. Finally, Germany failed to disappoint and posted a figure of 54.8, slightly ahead of consensus.

Seldom are there wide swings in the PMI numbers, however the market looks for two important attributes. Firstly, incremental improvement over the previous month, and secondly the ability to remain above the important 50 level.

The narrative of the PMI data out of Europe today is one of slow but steady improvement. It also shows a welcome convergence among the larger core economies within the Eurozone. These figures re-confirm the underlying strength beginning to form within the single currency bloc and as such are being treated as positive news by the market.

The Euro has drifted 15 points higher against the US Dollar over the course of the last hour. The staggered timings of this morning’s PMI releases ensured a tempered reaction by the currency markets. EURUSD is recovering from a 20bp plunge overnight as the pair broke through the 1.38 support level. Technical analysis would suggest that this ground can be retaken during this morning’s session. After a test of 1.38 things get a lot more interesting, there are particularly strong fundamentals at play this week including the Eurozone GDP figure expected on Wednesday. The main event this week however is the ECB rate decision on Thursday.

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