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EUR/USD Unfazed After Soft Markit Eurozone PMI Figures

EUR/USD Unfazed After Soft Markit Eurozone PMI Figures

Oded Shimoni, Junior Currency Analyst

Talking Points:

- Flash Eurozone Manufacturing PMI at 51.5 vs 51.9 expected

- Flash Eurozone Services PMI at 53.2, below expectations

- Euro little changed versus other major currencies

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The Euro was little changed versus other major currencies (at the time this report was written) after today’s Flash Markit Eurozone PMI printed soft figures. The Eurozone PMI Composite Index came at 53.0, below the expected 53.3 print, and the prior 53.1 figure. The Services PMI Activity Index rose slightly to 53.2, from the 53.1 prior reading, but was below the expected 53.3 print. Manufacturing PMI declined to 51.5, below the prior 51.6 print and the expected 51.9 figure.

The Euro-Zone reading came after earlier today the German Markit PMI figures missed expectations excluding a pickup in Manufacturing. A reading of less than 50 indicates a contraction of activity, above 50 points to an expansion, and an index of 50 says that no change has occurred.

Looking into the report, Markit remarked that average selling prices continued to fall as firms often offered discounts to win sales, but the rate of decline eased, so there might be some moderation of deflationary pressures. With that being said, Markit commented that the figures signal GDP growth of just 0.3%, and that the failure of business expectations to revive following the ECB’s announcement of more aggressive stimulus in March is a major disappointment that suggests growth is unlikely to accelerate in coming months.

The figures hit the wires after yesterdays’ ECB rate decision, in which the bank decided to keep policy unchanged, as the impact of their March decision to expand stimulus efforts is being examined. The latest decision saw the Euro rising against other majors before dropping versus the US Dollar later, on a fail near the range highs.

As was recently mentioned by DailyFX Chief Currency Strategist John Kicklighter, the Euro lacked critical escalation necessary to project a major breakout, and coming into the last trading day of the week it didn’t seem like the figures could be such a catalyst. Taking this into account, it appears that the market didn’t interpret the figures as providing clear conviction for direction, and the Euro was little changed versus other majors.

EURUSD 5-Minute Chart: April 21, 2016

--- Written by Oded Shimoni, DailyFX Research

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