German/ Eurozone flash PMIs Overview
Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European Central Bank’s monetary policy stance, the common currency and bond yields.
Germany’s flash manufacturing PMI for February, due at 0830 GMT, is seen arriving at 44.8, down from January’s final print of 45.3 while the index for the services sector is seen falling to 53.8 this month versus 54.2 last.
The forecast for the Eurozone flash manufacturing PMI (due at 0900 GMT) shows 47.5 for February versus 47.9 seen in the previous month. The Eurozone services sector PMI is seen printing a tad weaker at 52.2 in February compared to January’s 52.5 reading.
Impact on EUR/USD
Expectations regarding the growth of Germany’s export-oriented sectors of the economy have dropped sharply amid coronavirus outbreak, a recently released Zew survey of the financial market experts showed.
The recession fears would be bolstered if the German data prints below estimates. That will likely accelerate the ongoing sell-off in the single currency and push EUR/USD down to 1.0750.
EUR/USD fell to 1.0778 on Thursday to print the lowest level since April 2017 and was last seen trading at 1.0794.
If the German PMI betters estimates by a big margin, the EUR may find bids, although the immediate technical bias will remain bearish as long as the pair is holding under the descending 10-day average, currently at 1.0837.
About German/ Eurozone flash PMIs
The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.
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