EMU’s PMI Preview: what to expect of EUR/USD

It’s PMI-day in Euroland. Market bets see the advanced prints for the manufacturing PMI in Germany and the euro bloc coming in at 53.5 and 52.0, respectively, a tad lower than June’s final figures and probably due to another effect post-‘Brexit’ vote. Services PMI should follow suit, expected at 53.2 and 52.3, down from 53.7 and 52.8, respectively.

In view of strategists at TD Securities, “and we see mixed risks to consensus as firms adjust their activity to a post-Brexit Europe. The French services PMI likely posted a decline to 49.0 (consensus: 49.5) as it reflects spillovers from weaker UK sentiment, leaving it below 50 for the second consecutive month. We expect the German manufacturing PMI to fall to 53.2 (consensus: 53.4), with sentiment spillover effects more contained”.

In the FX space, EUR/USD continues to meander the low-1.1000s largely influenced by RO/RO dynamics and the performance of the greenback. Despite being under heavy pressure, EUR-bears still remain unable to break below the psychological support at 1.10 on a more sustainable basis. On the opposite side, the 200-day sma at 1.1080 emerges as the initial target ahead of recent highs in the 1.1160/80 band.