1. Why these PMIs are important
I'm sure you're all fully aware that the euro zone just emerged out of its longest recession in 40 years.Though it's definitely relieving to see the euro zone finally post positive growth, many are still unconvinced about its recovery. After all, growth remains uneven across the region and the economy still faces many headwinds. This partially explains why the markets hardly reacted to news that the economy had grown 0.3% in Q2 2013, exceeding forecasts for a 0.2% expansion.
Now more than ever, markets are interested in seeing how the economy will fair in the coming months. They want confirmation that the rebound we saw last quarter wasn't just a fluke, and the PMIs may just serve that purpose.
Unlike the GDP report, which is a lagging indicator, the PMIs are leading indicators of economic health. What this means is they have stronger implications on future growth and can provide more insight as to whether the recovery is gaining steam in Q3 or if what we saw in Q2 was nothing but a dead cat bounce.
2. How the markets may react
Obviously, if the PMIs out-perform forecasts across the board, it would paint a rosy outlook for the region and would suggest that the recovery has picked up its pace in Q3. That being the case, such results will likely be euro bullish.On the other hand, if all releases show disappointing results, we can reasonably expect the euro to weaken, as it would provide confirmation that the euro zone hasn't exactly gotten out of its rut.
There's also a chance that mixed results could also work against the shared currency if they show uneven growth across the region. For instance, if French and German PMIs show strong results but the euro zone-wide PMIs fail to impress the markets, it would imply highly uneven growth in the region, with weakness in the peripheral countries.
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
![EUR/USD stays in positive territory above 1.0850 after US data](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-euro-and-dollar-banknotes-17371247_XtraSmall.jpg)
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
![GBP/USD stabilizes above 1.2850 as risk mood improves](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/strong-pound-weak-dollar-17536259_XtraSmall.jpg)
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
![Gold rebounds above $2,380 as US yields stretch lower](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/gold-gm187363896-28836378_XtraSmall.jpg)
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
![Avalanche price sets for a rally following retest of key support level](https://editorial.fxstreet.com/images/Avalanche/Avalanche_XtraSmall.jpg)
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
![The election, Trump's Dollar policy, and the future of the Yen](https://editorial.fxstreet.com/images/Macroeconomics/Events/US%20Elections/Donald_Trump_closeup_XtraSmall.jpg)
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.
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