EURUSD Firms as Eurozone PMI Suggests Recovery in Growth
EURUSD Analysis and Talking Points
- Eurozone PMI led higher by improve services sentiment
- Euro firmer as PMI indicates continued strong GDP despite soft manufacturing
Eurozone Regains Momentum Despite Stagnant Manufacturing Sector
Eurozone PMI data for June had been generally mixed with the service reading rising to a 4-month high at 55, above forecasts, while manufacturing remained stagnant at an 18-month low of 55, which was in line with expectations as increased trade war tariff tensions continued to weigh on the manufacturing sentiment. Overall, the composite reading printed higher than expectations suggesting that the Eurozone is regaining some momentum, with the survey suggesting that GDP will rise by 0.5% in Q2.
The Euro is notably firmer following generally positive figures out of France and Germany, which indicates that growth continues to remain firm, despite the recent deterioration on the trade front amid rising trade tensions as both China and the US show no signs of backing down from a full-blown trade war. Additionally, news of faster expansion alongside rising price pressures will be welcomed by the ECB after it signalled last week that its ultra-loose monetary policy will end this year with rates rising in 2019.
EURUSD PRICE CHART: 1 MINUTE TIME FRAME (intra-day)
IG Client Positioning Sentiment suggests that the recent combination of current sentiment and recent changes provides a mixed EURUSD trading bias. For full client positioning click here
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--- Written by Justin McQueen, Market Analyst
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