Talking Points:
- Flash Eurozone Manufacturing PMI at 51.8 vs 52.0 prior and expected
- Flash Eurozone Composite PMI at 53.3, 7-month high
- Euro was little changed versus other major currencies, short term outlook here
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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 PMIs printed mixed readings.
The Eurozone PMI Composite Index came at 53.3, above the expected 53.1 and the prior 53.2, which marked a 7-month high.
The Services PMI Activity Index printed 53.1, above the expected 52.8 print and the prior 52.9.
Manufacturing PMI declined to 51.8, below the prior and expected 52.0 figure.
The Euro-Zone numbers came after earlier today the German Markit PMI figures showed some easing, while the France figures mirrored the region-wide report with a miss in manufacturing but a beat in services and the composite index.
According to Markit, France is on course for its best quarter of growth so far this year, but continues to trail behind Germany in terms of the overall pace of expansion.
A reading of less than 50 indicates a contraction of activity, above 50 points to an expansion, and an index of50 says that no change has occurred.
Looking into the report, Markit remarked that inflationary pressures remained muted, and average selling prices fell again.
Markit said that the Euro-Zone remains on a steady growth path in the third quarter, with no signs of the recovery being derailed by ‘Brexit’ uncertainty.
Interestingly, Markit said that the resilience of the PMIs in August will add to the belief that the ECB will see no need for any immediate further stimulus, but some disappointing trends might push the central banks to keep the door open for more stimulus later in the year.
With the report showing a mixed bag of readings, while also adding commentary which might be generally in line with the market’s view, the Euro may remain “driver-less” for the time being.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 28.9% of traders are long the EUR/USD at the time of writing. This is an extreme SSI reading, as retail traders are apparently trying to fade the move higher.
You can find more info about the DailyFX SSI indicator here
EURUSD 5-Minute Chart: August 23, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
