Yesterday, financial markets were engrossed with one ongoing theme – a Eurozone slowdown. That slowdown appears to be getting harsher, with yesterday’s French and German flash PMIs for September deteriorating markedly.
German gauges missed expectation by wide margins with the services sector, which has been cushioning the manufacturing weakness to a certain degree over recent months, slipping sharply lower. These readings nudged the German composite measure into contractionary territory for the first time in a long while. The data took participants by surprise and immediately created a strong sell off in the euro currency. Within minutes the EURUSD pair had been pushed back down to $1.10 support where it crashed through the psychological level with a quick move to $1.0955. The euro should remain pressured for the foreseeable future until either the economic data stabilises or we begin to see fiscal measures taken by the major regional economies.
Today sees a number of economic datapoints. Germany starts off with the IFO business climate reading which is followed up by UK finances and CBI industrial trend orders. Additionally, the UK Supreme Court ruling should arrive at mid-morning too. The afternoon sees US consumer confidence and regional manufacturing gauges. Overnight we’ll have a monetary policy announcement from the Reserve Bank of New Zealand where they are expected to maintain interest rates at 1%.
Written by Viv Savani. 9:01am, September 24th 2019
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