CAC Steadies After Starting Week With Losses, PMIs Next

The CAC index is showing little movement in the Tuesday session. Currently, the index is at 5,259.80, up 0.07% since the close on Monday. On the release front, German and eurozone confidence reports for February beat the forecasts, but were weaker than the January releases. German ZEW Economic Sentiment came in at 17.8, beating the estimate of 16.0 points. Eurozone ZEW Economic Sentiment dropped to 29.3, above the estimate of 28.4. On Wednesday, Germany and the eurozone release manufacturing PMIs. In the US, the Federal Reserve will release the minutes of its January meeting.

Eurozone indicators continue to point upwards, and French manufacturing and services PMI reports have been solid, pointing to expansion in the manufacturing and services sectors. The markets are not expecting much change in the February PMIs. Strong global demand has boosted manufacturing, and steady consumer spending has buoyed the services sector. President Macron is aggressively pursuing economic reforms, and this has renewed confidence in the French economy on the part of consumers and institutional investors.

Should cryptocurrencies be regulated? The recent turbulence in the global stock markets has triggered strong volatility in the currency markets, and ECB President Mario Draghi recently stated that the ECB was concerned about the euro’s sharp fluctuations. Last week, Draghi weighed in on Bitcoin, a cryptocurrency which has seen wild fluctuations in recent months. There are growing calls for regulation of these currencies, and central banks could play a key role in such oversight. However, Draghi poured cold water on any ECB involvement, saying that it was not the ECB’s responsibility to ban or regulate Bitcoin. Draghi added that the ECB was exploring the use of blockchain, a digital technology to monitor bitcoin transactions. France and Germany want to cryptocurrencies on the agenda at the next G-20 meeting, and there is bipartisan support in Congress to adopt new rules to regulate virtual currencies.

Economic Calendar

Tuesday (February 20)

• 5:00 German ZEW Economic Sentiment. Estimate 16.0. Actual 17.8
• 5:00 Eurozone ZEW Economic Sentiment. Estimate 28.4. Actual 29.3
• All Day – ECOFIN Meetings
• 10:00 Eurozone Consumer Confidence. Estimate 1

Wednesday (February 21)

• 4:00 Eurozone Flash Manufacturing PMI. Estimate 59.2
• 4:00 Eurozone Flash Services PMI. Estimate 57.7
• 14:00 US FOMC Meeting Minutes

*All release times are GMT

*Key events are in bold

CAC, Tuesday, February 20 at 7:00 EDT

Open: 5,210.20 High: 5,255.50 Low: 5,207.50 Close: 5,259.80

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