Euro lower on mixed PMI figures

Tuesday, Mar 22 2016

The French private sector economy ended the first quarter on a more positive note, reversing the dip in output seen during February. The latest data showed broad-based output growth across the manufacturing and service sectors, alongside strengthening optimism among service providers. However, there were also pockets of notable weakness, such as manufacturers’ new orders and employment, which both fell.

Overall, PMI data suggest a further modest rise in GDP during Q1, doing little to suggest any break from the sluggish growth pattern seen during recent times. While no change was expected Flash France Services Activity Index climbed to 51.2 from 49.2 in February what is a 5-month high. On the other hand Flash France Manufacturing PMI dropped to 49.6 from 50.2 in February, what is a 7-month low.

Today’s flash PMI results signal ongoing growth of private sector output in the euro area’s largest member state, despite the pace of expansion failing to accelerate from February’s five-month low. Moreover, it looks as if momentum in the German economy will remain sluggish in the months ahead, as slowing new order growth was accompanied by the weakest increase in backlogs of work since the summer of last year.

Furthermore, there are signs that subdued demand is now also affecting the labour market, as the rate of job creation eased to a near one-year low. Flash Germany Manufacturing PMI stood at 50.4 from 50.5 in February, a16-month low, while Flash Germany Services Activity Index rose to 55.5 from 55.3 in February, a 3-month high.

Euro is currently being traded few points above 1.12 level. Pair is likely to find support around 1.1150 handle and resistance above 1.1250 level. Later today, German Business Climate and ZEW Economic Sentiment figures are scheduled for a release.

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