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23 Sep 2013
Euro stumbles on weak manufacturing PMI despite strengthening overall picture, EUR/USD falls from highs
FXstreet.com (London) - The Markit Eurozone PMI Composite Output Index rose to a 27-month high in September - the largest rise in activity since June 2011, according to the flash estimate. Flash PMI hit 52.1, from 51.5 in August, continuing its 6-month straight gains. The report indicated that activity has now risen for three successive months, and September rounded off the strongest quarterly expansion since the second quarter of 2011.
But while the headline PMI figures indicate an overall strengthening of European macro conditions, they were weighed down by poor manufacturing numbers, with Eurozone Manufacturing PMI at 51.1, a 2-month low, down from 51.4 in August.
The PMI report trigged a fall in EUR/USD, which had threatened to break a seven-month high after Angela Merkel’s resounding result in the German general elections. Merkel’s Christian Democratic party (CDU) took 41.5 percent of the vote in yesterday’s elections, against 25.7 percent for Peer Steinbrueck’s Social Democrat party (SPD). Though Merkel bettered expectations, she still fell just short of the seats needed for an absolute majority. Euro gains were checked on the prospect of extended coalition negotiations after Merkel’s allies, the classical liberal Free Democrats (FDP) failed to break the 5 percent threshold required to take seats in the Bundestag.
Germany continued its upwards momentum with business activity growing at the fastest rate for eight month. Employment grew at the sharpest rate for 18 months. In line with the Eurozone as a whole, German manufacturers reported the weakest increase in output since June.
Business activity in France beat consensus expectations to rise for the first time since February 2012. The French labour market situation was given a glimmer of hope, with the rise in unemployment dropping to its lowest rate in 19 months. Manufacturing declined in line with the rest of the Eurozone.
But while the headline PMI figures indicate an overall strengthening of European macro conditions, they were weighed down by poor manufacturing numbers, with Eurozone Manufacturing PMI at 51.1, a 2-month low, down from 51.4 in August.
The PMI report trigged a fall in EUR/USD, which had threatened to break a seven-month high after Angela Merkel’s resounding result in the German general elections. Merkel’s Christian Democratic party (CDU) took 41.5 percent of the vote in yesterday’s elections, against 25.7 percent for Peer Steinbrueck’s Social Democrat party (SPD). Though Merkel bettered expectations, she still fell just short of the seats needed for an absolute majority. Euro gains were checked on the prospect of extended coalition negotiations after Merkel’s allies, the classical liberal Free Democrats (FDP) failed to break the 5 percent threshold required to take seats in the Bundestag.
Germany continued its upwards momentum with business activity growing at the fastest rate for eight month. Employment grew at the sharpest rate for 18 months. In line with the Eurozone as a whole, German manufacturers reported the weakest increase in output since June.
Business activity in France beat consensus expectations to rise for the first time since February 2012. The French labour market situation was given a glimmer of hope, with the rise in unemployment dropping to its lowest rate in 19 months. Manufacturing declined in line with the rest of the Eurozone.