Euro Rises on an Upward Revision of the PMI for Manufacturing
THE TAKEAWAY: Euro-zone Manufacturing PMI revised higher to 46.7 for April -> Markit says revision offers little consolation to a falling index -> Euro trading slightly higher
The Euro-zone manufacturing Purchasing Managers’ Index was confirmed at a four month low in April according to Markit, but a revision higher of the PMI sent the Euro upwards against the US Dollar.
The PMI for manufacturing was revised higher to 46.7 from a previous estimate of 46.5, and the index result is down from 46.8 in March. A PMI result below 50 indicates a contraction in sector activity, and the manufacturing index was last above 50.0 in July of 2011.
All of the national PMI’s for manufacturing were reported below 50.0 in the Euro-zone. The German manufacturing index saw a 4-month low of 48.1, while France reported the lowest manufacturing PMI in the Euro-zone at 44.4, which was also France’s highest index result in four months.
The Euro-zone has experienced five straight quarters of economic contraction, ending with a 0.6% GDP decline in Q4 of 2012. Markit said in April that it doesn’t see signs of the recession ending, but the Q1 decline should be less than the decline in Q4. Markit Chief Economist Chris Williamson wrote in the release that, “The fact that the Eurozone Manufacturing PMI came in slightly higher than its flash reading offers little consolation to the fact that the index fell further in April, and suggests that the industrial sector is contracting at a quarterly rate of 0.5% at the start of the second quarter.”
The Euro rose slightly higher above 1.3150 against the US Dollar following the revision of the Euro-zone PMI’s. EUR/USD may now see resistance at 1.3191, by the 50% Fibonacci retracement of the rally from November’s low to February’s high. Support may be provided by the key 1.3000 figure.
Later today, the ECB will announce its rate decision following its May meeting, and most Bloomberg surveyed analysts are expecting a rate cut. Read possible impact of the rate decision on Forex markets here.
EURUSDDaily: May 02, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to firstname.lastname@example.org .
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