By Areena FxThe economic activity in the Eurozone’s private sector expanded at a modest pace in early September, with the preliminary HCOB Composite Purchasing Managers’ Index (PMI) edging slightly higher to 51.2 from 51 n August.
In this period, the HCOB Manufacturing PMI declined to 49.5 from 50.7, pointing to a contraction in the manufacturing sector, while the Services PMI improved to 51.4 from 50.5.
Assessing the survey’s findings, “cost inflation in the services sector, which the European Central Bank watches closely, has eased slightly but remains unusually high given the fragile economic backdrop,” Dr. Cyrus de la Rubia, Chief Economist at Hamburg Commercial Bank (HCOB), said and added: “Selling prices have cooled more noticeably, which might just prompt the ECB to consider whether a rate cut before year’s end could be back on the table.”
Market reaction to Eurozone PMI data
EUR/USD stays under modest bearish pressure following the mixed PMI data and was last seen losing 0.12% on the day at 1.1788.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.13% | -0.14% | -0.01% | 0.18% | 0.09% | 0.20% | -0.03% | |
| EUR | -0.13% | -0.13% | -0.12% | 0.11% | 0.04% | 0.13% | -0.11% | |
| GBP | 0.14% | 0.13% | 0.08% | 0.24% | 0.17% | 0.26% | 0.03% | |
| JPY | 0.01% | 0.12% | -0.08% | 0.18% | 0.14% | 0.20% | 0.06% | |
| CAD | -0.18% | -0.11% | -0.24% | -0.18% | -0.08% | 0.02% | -0.21% | |
| AUD | -0.09% | -0.04% | -0.17% | -0.14% | 0.08% | 0.09% | -0.05% | |
| NZD | -0.20% | -0.13% | -0.26% | -0.20% | -0.02% | -0.09% | -0.23% | |
| CHF | 0.03% | 0.11% | -0.03% | -0.06% | 0.21% | 0.05% | 0.23% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
This section below was published at 07:30 GMT to cover the preliminary September HCOB PMI data from Germany.
- Germany’s Manufacturing PMI fell to 48.5 in September vs. 50 expected.
- Services PMI for the German economy jumped to 52.5 in September vs. 49.5 estimates.
- EUR/USD stays rangebound near 1.1800 after mixed German PMIs.
The German manufacturing sector remained in contraction in September, while the services sector activity picked up, the preliminary business activity report published by the S&P Global and Hamburg Commercial Bank (HCOB) survey showed on Tuesday.
The HCOB Manufacturing PMI in the Eurozone’s economic powerhouse fell to 48.5 in September, as against August’s 49.8, missing the market forecast of 50. The measure hit a four-month low.
Meanwhile, the HCOB Services PMI edged higher to 52.5 in September from 49.3 in August. Markets expected a 49.5 reading in the reported period. The gauge jumped to an eight-month peak.
The HCOB Preliminary German Composite Output Index came in at 52.4 in September vs. 50.5 in August and 50.5 expected. The index was at its highest level in 16 months.
Market reaction to the German PMI data
EUR/USD keeps its range after the mixed German data, modestly lower on the day near 1.1800 at the time of writing.
This section below was published at 4:54 GMT as a part of the German and Eurozone preliminary PMI data.
HCOB German/ Eurozone flash PMIs Overview
Germany and the Eurozone have the preliminary Purchasing Managers’ Index (PMI) data for September to be released by S&P Global and Hamburg Commercial Bank (HCOB) on Tuesday, later this session at 07:30 and 08:00 GMT, respectively.
HCOB German Composite PMI is expected to hold steady at 50.5 in September, with market consensus of a rise in the Manufacturing PMI to 50.0 from 49.8 and the Services PMI to 49.5 from 49.3 in August.
HCOB Eurozone Composite PMI is forecast to inch higher to 51.1 in September, from 51.0 in August. Meanwhile, Manufacturing PMI is anticipated to rise to 50.9 from 50.7 previously, while the Services PMI is expected to remain consistent at 50.5 in September.
How could HCOB German/ Eurozone flash PMIs affect EUR/USD?
Any upside in the HCOB Manufacturing PMIs may provide support for the EUR/USD pair as the Euro (EUR) remains stronger following the preliminary Eurozone Consumer Confidence Index for September, which improved slightly to -14.9 from -15.5 in August.
However, the upside of the EUR/USD pair could be limited as the US Dollar (USD) holds ground due to cautious Fedspeak. Traders will likely observe the preliminary reading of the US S&P Global PMI reports for September later in the day. US Federal Reserve (Fed) Chair Jerome Powell will also be eyed.
Technically, the EUR/USD pair hovers around the psychological level of 1.1800 after registering 0.5% gains in the previous session. The bullish bias prevails as the 14-day Relative Strength Index (RSI) remains above the 50 level and supports the pair to explore the region around the 1.1918, the highest since June 2021, which was recorded on September 17.
On the downside, the initial support lies at the nine-day Exponential Moving Average (EMA) of 1.1776. A break below this level would weaken the short-term price momentum and prompt the EUR/USD pair to navigate the region around the 50-day EMA at 1.1677.
Euro FAQs
What is the Euro?
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
What is the ECB and how does it impact the Euro?
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
How does inflation data impact the value of the Euro?
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
How does economic data influence the value of the Euro?
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
How does the Trade Balance impact the Euro?
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.