Apart from the German Services PMI, the other 3 purchasing managers’ indicators fell short of expectations. The figures are initial, flash figures, for the month of February. French manufacturing PMI came out at 48.5, a slide from 49.3 last month and 49.6 expected. French Services PMI made a bigger drop from 48.9 to 46.9 points, short of 49.5 expected. German manufacturing PMI slid from 56.5 to 54.7. No real change was expected. Only the German service sector enjoyed a nice rise from 53.1 to 55.4 points.
50 points separate contraction from growth. According to Markit’s numbers, France is struggling to return to growth. EUR/USD drops all the way from 1,3750 to 1.3695.
Also the Chinese Manufacturing PMI disappointed with a drop from 49.5 to 48.3 points, triggering worries about the global economy.
A first wave of EUR/USD selling was seen with the relatively hawkish FOMC meeting minutes. They boosted the dollar across the board, but the effect was short lived. The common currency strengthened once again.
This drop is euro-related and seems more significant. However, we have seen in the past that bad European news had a temporary effect and served as buy opportunities.
The all-European Flash PMIs are due soon. They are expected to be in positive territory: 54.2 for manufacturing and 51.9 for services. However, after these disappointments from the biggest countries, the markets’ expectations for the all-European figures will have been adjusted.
Support awaits at 1.3650. Resistance above 1.37 is at 1.3740. For more on the euro, see the EURUSD forecast.
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