Euro Drops as Euro-Zone PMIs Miss Expectations, Trend Intact

2017-07-24 08:29:00

Talking Points

- The composite purchasing managers’ index for the Euro-Zone in July fell to 55.8, below both the forecast 56.2 and the previous 56.3.

- EURUSD lost ground, though its upward trend remains in place.

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The Euro eased against the US Dollar Monday as the “flash” composite purchasing managers’ index for the Euro-Zone dropped in July to a six-month low of 55.8 from June’s 56.3, beneath the 56.2 predicted by analysts. That was due principally to a drop in the PMI for the manufacturing sector as the services sector held up well.

The manufacturing PMI fell to 56.8, a three-month low, from 57.4 while the services PMI was unchanged at 55.4.

“The July fall in the PMI indicates that the Euro-Zone’s recent growth spurt lost momentum for a second successive month, but still remained impressive,” noted Chris Williamson, chief economist at IHS Markit, which compiles the data.

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“The survey data are historically consistent with GDP rising at a quarterly rate of 0.6%, cooling slightly from a pace of over 0.7% signaled for the second quarter. The slowing pace of economic growth signaled by the surveys and the accompanying easing of price pressures adds to the belief that ECB policymakers will be in no rush to taper policy, and will leave all options open until the central bank sees a clearer picture of the sustainability of the upturn,” he added.

In response to the numbers, EURUSD fell back, although as the chart below shows it was giving up some of its recent gains even before the data were published. Nonetheless, the strong upward trend in the pair remains in place.

Chart: EURUSD Five-Minute Timeframe (July 24, 2017)