Euro Gains Post Encouraging PMI`s

Euro Gains Post Encouraging PMI`s

By: Oliver Miller | Where To Trade | On:23-10-2014 02:40
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Key Highlights

  • US initial jobless claims registered an increase to 283K, up from the previous revised reading of 266K.
  • Euro area manufacturing and services PMI exceeded the market expectation, as the manufacturing PMI came in at 50.7, overcoming the fear of contraction.
  • German manufacturing PMI too exceeded the expectation and registered a rise from 49.9 to 51.8.
  • UK retail sales registered a decline of 0.3%, down from the previous increase of 0.4%. The market was expecting a 0.1% decline.
  • UK Confederation of British Industry (CBI) Industrial Trends Orders fell to -6, down from the previous reading of -4.
  • EURUSD fell sharply earlier during the London session, but recovered once the Euro area manufacturing PMI registered an expansion.

 

US Consumer Price Index

Earlier during the NY session, the US initial jobless claims were released by the US Department of Labor. The market was expecting the US initial jobless claims to increase to 282K in the week ending October 18 in the seasonally adjusted terms. However, the outcome was a bit disappointing, as the US initial jobless claims increased by more than 15K and came in at 283K. Moreover, the previous reading was also revised up from 264K to 266K. So, overall the outcome was not on the positive side and might weigh on the US dollar in the short term.

However, the reaction was on the opposite side, as the EURUSD pair was seen trading a touch lower after the release. Other pairs such as NZDUSD and GBPUSD were also seen trading lower, as the US dollar was bid across the board. This might be an initial reaction and could trade lower moving ahead.

 

Euro Area Manufacturing PMI

There were a lot of important economic releases lined up during the London session. The most important ones include Euro area manufacturing and services PMI, German manufacturing and services PMI and UK retail sales data. The outcome in the Euro area was a bit better than the market was expecting. Both the Euro area manufacturing and services PMI reported by the Markit economics came better than expected and registered a rise to 50.7 and 52.4 respectively. The most important point was that the German manufacturing PMI was expected to register a contraction, but it managed to pull of an expansion. This caught the attention of the Euro buyers, as the EURUSD pair traded higher after the release.

 

Where To Trade - Euro area MPMI

 

On the other hand, the outcome in the UK was disappointing, as the UK retail sales fell more than the market was expecting. It registered a decline of 0.3%, compared with the previous month’s increase of 0.4%. The GBPUSD pair was seen trading lower after the release.

Technically, the EURUSD pair again survived the 1.2610 support area. We have mentioned the importance of this level time and again. This level again fulfilled the expectation, and too combined with a fundamental release. We need to see how the pair trades in the upcoming sessions, as there are a lot of hurdles on the way up for the pair.

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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