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European Session – Eurozone PMI lifts euro, US ISM hurts dollar

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ismGlobal PMIs were in focus today, with expansion in manufacturing activity gaining pace in China, the UK and even in the Eurozone. Japan and the US disappointed.

The encouraging manufacturing PMI release for the Eurozone was enough to lift the euro. The final Markit PMI reading for March rose to a 10-month high of 52.2, above forecasts of 51.9. A cheaper euro helped increase exports, which consequently drove the PMI higher. The PMI index has been above the 50 mark for 21 consecutive months. The euro hit a high of 1.0798 in the European session. Focus turns to Thursday’s ECB minutes of the March meeting.

Cable opened in Europe at 1.4856 and fell to a session low of 1.4738. Sterling was weaker today even after an increase in the UK manufacturing PMI to 54.4 in March from 54.0 the month before. This was the fastest growth in 8 months and above forecasts for a rise to 54.3. However, the UK elections in May are weighing on the pound as concerns grow after polls showed that the Scottish National Party was gaining ground. The SNP is planning a second Scottish independence referendum.

The dollar briefly rose back above the key 120.00 yen level before tumbling to 119.48 on disappointing US ISM manufacturing data. The index showed growth fell in March to the lowest reading since May 2013 as national factory activity slowed down. The ISM fell to 51.5 from 52.9 the month before. Expectations were for a reading of 52.5. The main driver for the dollar will be Friday’s nonfarm payrolls report.


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