Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Will PMI’s Aid EUR And GBP Rallies?

Published 07/03/2017, 02:49 AM
Updated 03/05/2019, 07:15 AM

European equity markets are expected to open a little higher on Monday as traders await a selection of manufacturing PMI reports from across Europe as well as some unemployment data.

US Bank Holiday Weighs on Volumes Early in the Week

Trading volumes are likely to be relatively subdued at the start of the week, as we’ve already seen evidence of in the Asian session overnight, due to Tuesday’s bank holiday in the US and the half day today that precedes it. Of course, this doesn’t mean markets will necessarily be flat and the constant stream of data throughout the day could aid this.

Japanese and Chinese Data Beat Expectations

We’ve already had some decent manufacturing numbers out of China and Japan overnight, with the PMIs both beating expectations and the Tankan index rising to 17 – its joint highest reading in almost a decade. The yen hasn’t been overly responsive to the data though, with the Bank of Japan remaining among the increasingly few central banks that is unlikely to tighten monetary policy any time soon, although more numbers like this may change that.

PMIs Put Focus Back on EUR and GBP

Sterling and the euro were two of last week’s standout performers as the heads of both central banks delivered quite hawkish speeches – intentional or not – that went against their previously dovish stance. While we’ve known for some weeks now that policy makers at both the Bank of England and the ECB have become increasingly open to tighter monetary policy, this shift from Mark Carney and Mario Draghi was a sign that even the more dovish policy makers may be reluctantly accepting the possibility that monetary policy will become less accommodative.

With sterling and the euro both consolidating around their recent highs against the dollar, traders may be looking to today’s PMI numbers to provide the catalyst for another push higher. We’ve seen a gradual improvement in sentiment in the euro area over the last year, as the economy finally begins to pick up following years of mediocre growth. The UK PMI has benefited greatly over the last year from the Brexit-related collapse in sterling, as foreign buyers look to take advantage of the much cheaper prices.

GBP/USD Daily Chart

EUR/USD Chart

Original post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.