Euro Weekend Rally Obstructed By Weak PMI Data Set

By David Schutz,

THE TAKEAWAY: European manufacturing and services PMIs weaker than expected -> Euro continues intraday weakness versus US Dollar, Japanese Yen

Weak readings from the French and German services and manufacturing sectors sparked a bout of Euro weakness today. The weighty German manufacturing purchasing managers’ index led losses, coming in at 46.3 versus the expected 49.0. Meanwhile, the French PMI services gauge fell to 46.4 from the expected and previous 50.1. A number below 50 indicates market contraction.

Weakness in German manufacturing is ofparticular concern to many market participants, given Germany’soverall relative strength in the face of the current far-reachingcrisis. Germany is also the Eurozone’s largestand most influential economic player. The German economy hasthus far resisted recession as ultralow unemployment levels bolsterconsumer spending and offset a slump in internationaldemand. New orders predictablywakened today’ s number, withparticularly weak demand from the EuropeanSouth .

The Euro-area composite PMIs also came in weaker than expected, underscoring the Eurozone’s deep-rooted growth issues, as the region’s leaders attempt to juggle lagging growth, burdensome sovereign debt, and inflation’s ever-increasing threat.

Today’s weak reading is expected to further complicate the European Central Bank’s task as it struggles to guide the region to economic recovery. Rising energy costs continue to sap consumers’ purchasing power as economies descend into recession and demand drops. The ECB’s Governing Council in its most recent report mentioned a “moderate recovery” since the beginning of 2012, but warned that inflationary risks remain a factor in price action.

The Euro weakened sharply against the US Dollar, as today’s release damaged confidence in the single currency and increased fears that the Euro-area’s economy shrank in the first quarter.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/23/Euro_Weekend_Rally_Obstructed_by_Weak_PMI_Data_Set_.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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