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Euro Lifted By Better PMI Readings

Last updated 1/24/2012 4:33 AM ET (GMT -5) 0 Comments - Add your comment

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Boris Schlossberg

Director of Currency Research, GFT

Both German and French flash PMI data for January printed better than expected suggesting that economic activity in core Europe is beginning to stabilize, as the private sector in the region returned to growth.

French composite PMI rose to 50.9 - 5 month high - with services increasing to 51.7 from 50.5 eyed while manufacturing slipped to 48.5  form 48.9 the month prior. In Germany the data was unambiguously better with services rising to 54.5 from 52.6 forecast and manufacturing breaking back above the 50 boom/bust line to 50.9. The broader EU  PMI readings improved as well as the services component increased to 50.5 returning back to expansionary territory for the first time in 5 months.

The much better than expected PMI readings indicate that Europe may avoid a recession in H1 of this year as demand rebounds  despite the hand wringing of investors over the sovereign debt problems in the region. The pair initially saw little reaction to the news as weak equities and lingering concerns over the PSI deal in Greece weighed on sentiment, but was eventually able to catapult to 1.3050 in mid-morning European trade. If risk appetite improves the euro could target the 1.3080-1.3100 region as many intermediate term shorts begin to capitulate.  

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About The Author

Boris Schlossberg began his Wall Street trading career more than 20 years ago at Drexel Burhnam Lambert. There, he traded nearly every type of financial product on the market in the U.S., from equities and options to stock index futures and foreign exchange. His innate ability to analyze market information and use it to trade has helped him become an industry-recognized, “go to” trading professional.

These days, whenever the markets move, many organizations turn to Schlossberg for his take on the situation. He is a weekly contributor to CNBC's Squawk Box and a regular commentator for Bloomberg radio and television. His daily currency research is widely quoted by Reuters, Dow Jones and Agence France Presse newswires and appears in numerous newspapers worldwide. Schlossberg has written for publications like SFO magazine, Active Trader and Technical Analysis of Stocks and Commodities. He is also the author of Technical Analysis of the Currency Market and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Kathy Lien. He joined GFT in 2008.