European update – PMIs provide a late boost

Quiet end to lively week

It’s shaping up to be a relatively peaceful end to what has been an otherwise action-packed week, with steady gains in Europe getting us off to a decent start.

European markets were relatively flat at the open but a batch of encouraging PMI numbers from the euro area has given stocks a bit of a lift. The euro is also edging higher on the back of the numbers, looking to build on the gains of the last couple of days and continue the march towards 1.14 against the dollar, where it could face stiff resistance. This has of course been aided by some Fed-driven weakness in the greenback, which will appease Trump, for now.

EURUSD Daily Chart

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The PMI releases go against what had become quite a worrying trend and may spur some optimism that things are on the up. Of course, Germany’s manufacturing sector remains deep in contraction and the global economic outlook isn’t great so perhaps it’s still a little early for optimism. Still, it’s good news and good data at a time when it’s very much needed and may enable us to see the week out on a high.

The focus now switches to North America on the data front, with US manufacturing and services PMIs due, as well as Canadian retail sales. The trend again has not been too favorable in the US so perhaps a similar result will give us cause for optimism that doesn’t just come from central banks cutting rates.

If this week has shown anything, it’s that we’re once again very reliant on central banks for returns. US stocks are back at record highs and we very much have central banks to thank for that. The markets had already been on a decent run from various comments in recent weeks but Draghi put the icing to the cake on Tuesday and Powell added the sprinkles on Wednesday.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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