Euro Rallies as PMI Knocks Out Expectations
THE TAKEAWAY: The composite output index was reported above 50.4, above expectations -> Markit says Euro-zone may pull out of recession in Q3 -> Euro rallies
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The initial estimates of the Euro-zone Purchasing Managers’ Index for July knocked out expectations and sent EUR/USD to a new monthly high.
The composite output index, which was reported at 50.4, showed rising output for the first time in 18 months, beating expectations for the composite number to only rise to 49.1 from 48.7 in June. The manufacturing PMI also beat expectations at 50.1, the first index reflecting expanding manufacturing activity in two years. The PMI for services beat expectations at 50.4.
The initial estimate of French PMI’s also beat expectations, at 49.8 and 48.3 for manufacturing and services activity respectively. The German PMI for services rose to 52.5, beating expectations for only a small rise from 50.4 in June to 50.7. The German manufacturing PMI was reported at 50.3, beating expectations for 49.2.
The above-neutral PMI’s bode well for Euro traders looking to see an end of the six straight quarter recession in the Euro-zone. ECB President Draghi said he expects the region will see an expanding economy before the end of 2013. However, Markit suggested the end of the recession may happen even sooner. “The best PMI reading for one-and-a-half years provides encouraging evidence to suggest that the euro area could – at long last – pull out of its recession in the third quarter,” said Markit Chief Economist Chris Williamson.
The Euro continues to trade around 1.3235 against the US Dollar at the time of this writing, and the pair may continue to see resistance around 1.3284. The key 1.3000 line may provide support for EUR/USD.
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EURUSDDaily: July 24, 2013
Chart created by Benjamin Spier using Marketscope 2.0
-- Written by Benjamin Spier, DailyFX Research. Feedback can be sent to bbspier@fxcm.com .
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