4 Nov 2013
EUR/USD Support for euro on final PMI print but relative tightening expectations will drive the pair
FXstreet.com (London) - Final Eurozone PMI numbers pointed to composite recovery, despite weaker regional manufacturing numbers. The data gave the common currency some support against the dollar this morning, but relative tightening expectations will likely drive the UER/USD pair going forward.
The final Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.3 from September's 51.1, confirming last week’s flash reading.
Much of the up-tick came from German manufacturing strength, rising to 51.7 from 51.1 in September.
Markit Spanish manufacturing PMI expanded for a third straight month, printing at 50.9 for October. However, with Spain struggling with huge unemployment levels, the manufacturing unemployment numbers will not be good news - Markit's manufacturing employment index fell to 45.2 in October from 47.5 in September.
"The most positive aspect from the latest survey was a quickening of new order growth, but again this seemed to be mainly based on success in export markets rather than a broad-based improvement in client demand," said Markit economist Andrew Harker.
French manufacturing continued its long-running decline, with its twentieth straight contraction. Markit PMI fell to 49.1 in October after climbing to 49.8 in September.
EUR/USD is up since the open, gaining 0.08 percent to USD1.3506. However, much of the direction of the pair will come from expectations of Mario Draghi’s speech on Thursday and US GDP and NFP numbers due at the end of the week.
The euro was driven to a six-week low last week following weaker-than-expected Eurozone inflation numbers which fuelled predictions of a further ECB rate cut. The possibility of a December taper helped to support the dollar against a struggling euro.
However, an ECB rate cut would be an extreme move from the central bank and would require a rejection of the “steady Eurozone recovery” script from which Eurozone policymakers have been reading. Additionally, the US is heading for some particularly weak non-farm payroll numbers on Friday. Following last month’s miss, calls for a December taper could very likely be wide of the mark, setting the pair up for a rebounding of last week’s losses as the week goes on.
The final Markit Manufacturing Purchasing Managers' Index (PMI) rose to 51.3 from September's 51.1, confirming last week’s flash reading.
Much of the up-tick came from German manufacturing strength, rising to 51.7 from 51.1 in September.
Markit Spanish manufacturing PMI expanded for a third straight month, printing at 50.9 for October. However, with Spain struggling with huge unemployment levels, the manufacturing unemployment numbers will not be good news - Markit's manufacturing employment index fell to 45.2 in October from 47.5 in September.
"The most positive aspect from the latest survey was a quickening of new order growth, but again this seemed to be mainly based on success in export markets rather than a broad-based improvement in client demand," said Markit economist Andrew Harker.
French manufacturing continued its long-running decline, with its twentieth straight contraction. Markit PMI fell to 49.1 in October after climbing to 49.8 in September.
EUR/USD is up since the open, gaining 0.08 percent to USD1.3506. However, much of the direction of the pair will come from expectations of Mario Draghi’s speech on Thursday and US GDP and NFP numbers due at the end of the week.
The euro was driven to a six-week low last week following weaker-than-expected Eurozone inflation numbers which fuelled predictions of a further ECB rate cut. The possibility of a December taper helped to support the dollar against a struggling euro.
However, an ECB rate cut would be an extreme move from the central bank and would require a rejection of the “steady Eurozone recovery” script from which Eurozone policymakers have been reading. Additionally, the US is heading for some particularly weak non-farm payroll numbers on Friday. Following last month’s miss, calls for a December taper could very likely be wide of the mark, setting the pair up for a rebounding of last week’s losses as the week goes on.