Analysts at Danske Bank provided a brief preview of Friday’s key PMI releases from the Euro-zone, the UK and the US. This along with the ECB President Christine Lagarde’s first speech should play a key role in influencing the market action on the last trading day of the week.
“The overarching market focus today will be the November PMI releases in the US and the euro area, including Germany. Last month, both the German and the euro area PMIs stabilised around the previous levels and this month’s print will show whether this was an actual trough or whether further slowdown lies ahead.”
“Recent further increases in indicators such as ZEW and Sentix seem to support the trough view. However, external demand is still the main driver of the euro area manufacturing sector and due to lingering global political uncertainties we do not expect a real trough in the euro area manufacturing cycle until early 2020.”
“For November, we expect the euro area manufacturing PMI to hold stable at 45.9 and the service index to fall slightly to 51.9 in light of the recent deteriorating business expectations.”
“In the US, we expect the preliminary manufacturing PMIs for November to be broadly unchanged. Markit PMI orders-inventory balance suggests stronger PMI manufacturing in November, but ISM manufacturing has been below 50 the past couple of months. We believe that both PMI and ISM surveys should be monitored together in order to get a clear picture of the manufacturing activity.”
“We think UK flash PMIs for November will remain rather weak and in turn support our call for a cut by BoE in January and thus for a higher EUR/GBP.”
“New ECB President Lagarde will give a key note speech at 9:00 CET, which may reveal more about her view on the euro area economy and monetary policy. In Sweden, Riksbank’s Vice Governors Per Jansson and Henry Ohlsson will also speak about the economic outlook and monetary policy.”