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Euro May Rise as PMI Data Triggers Short-Covering

Euro May Rise as PMI Data Triggers Short-Covering

Talking Points:

  • Euro May Rise if Upbeat PMI Figures Trigger Unwinding of Short Positions
  • Aussie, NZ Dollars Underperform as US Dollar Rebound Continues in Asia
  • See Economic Releases Directly on Your Charts with the DailyFX News App

The preliminary set of November’s Eurozone PMI figures headlines the economic calendar in European trading hours. A slight acceleration in the pace of manufacturing- and service-sector growth is expected, with the regional composite gauge ticking up to 54.0 from 53.9 recorded in the prior month.

Economists have steadily downgraded their forecasts for Eurozone economic data since July even as realized outcomes have increasingly outperformed relative to expectations (according to data from Citigroup). That opens the door for an upside surprise.

Such a result may encourage short-covering after net speculative bets against the Euro hit the highest level in over five months, sending the currency upward. Indeed, options markets reveal bets on a near-term recovery, with 1-week risk reversals showing investors willing to pay a 63bps premium for the right to buy the common unit against the US Dollar compared with an equivalent right to sell.

Euro gains may prove short-lived however. Dovish commentary from ECB officials has set the stage for stimulus expansion at next month’s policy meeting. That means traders are unlikely to commit to a firm bullish bias, painting any immediate gains as corrective in the context of a longer-term decline.

For its part, the greenback continued to correct higher for a second consecutive session in overnight trade after dropping to a two-week low last Thursday. The Australian and New Zealand Dollars proved weakest against the greenback having outperformed in the prior week.


Asia Session

11:00EURECB's Weidmann Speaks in Freiburg, Germany ---
21:45NZDNet Migration SA (OCT)6210-5600

European Session

08:00EURMarkit France Mfg PMI (NOV P)50.850.6Low
08:00EURMarkit France Services PMI (NOV P)52.552.7Low
08:00EURMarkit France Composite PMI (NOV P)52.552.6Low
08:00CHFMoney Supply M3 YoY (OCT)-1.2%Low
08:00CHFTotal Sight Deposits (NOV 20)-467.7BLow
08:00CHFDomestic Sight Deposits (NOV 20)-401.9BLow
08:30EURMarkit/BME Germany Mfg PMI (NOV P)52.052.1Medium
08:30EURMarkit Germany Services PMI (NOV P)54.454.5Medium
08:30EURMarkit/BME Germany Composite PMI (NOV P)54.054.2Medium
09:00EURMarkit Eurozone Mfg PMI (NOV P)52.352.3Medium
09:00EURMarkit Eurozone Services PMI (NOV P)54.154.1Medium
09:00EURMarkit Eurozone Composite PMI (NOV P)54.053.9Medium

Critical Levels

CCYSupp 3Supp 2Supp 1Pivot PointRes 1Res 2Res 3

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.