Article Highlights

  • Weaker-than-Expected European data; Manufacturing PMI 53.0 vs. 54.0 forecast and Services PMI 51.7 vs. 51.9
  • German PPI y/y: -1.1% vs. -0.8% forecast
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It was all about European PMI data this morning…and it wasn’t good! Yikes!  German and French Flash Manufacturing PMI numbers both came in below forecasts, with France posting numbers below the 50.0 level (indicating contraction). Germany did post the on piece of positive data with a better-than-expected Flash Services PMI number (55.4 vs. 53.4 forecast), but it wasn’t enough to hold off the bears from taking hold of the euro.

The euro reaction was negative, and currently still down against most of the majors on the session: EUR/JPY is down 85 pips (-0.61%) to 139.61; EUR/USD is down 40 pips (-0.29%) to 1.3695; and EUR/GBP is currently down 9 pips (-0.12%) to .8220.

The weak data does add fuel to risk aversion behavior, sparked again by the weak China PMI data earlier in the Asia session. This favored the Japanese yen against the majors: USD/JPY is down 33 pips (-0.32%) to 101.96; GBP/JPY is down 75 pips (-0.44%) to 169.83; AUD/JPY is down 41 pips (-0.42%) to 91.62.

Coming up for the rest of the Thursday session, we’ve got a slew of potential market movers from the U.S.  The most notable will be the CPI and Philadelphia Fed survey data. The expectation is for the headline consumer inflation number to tick slightly lower (0.1% forecast vs. 0.2% previous) and for the Philly Fed number to come in lower as well (8.0 vs. 9.4 forecast).

If we continue to see the trend of weakening data continue in the U.S., we could see risk aversion behavior start to kick in, which means a further reduction of longs in “higher-yielding” assets back into “safe haven” assets–typically positive for the Greenback and the yen.  Stay frosty!

See also:

Asian Session Recap

U.S. Session Recap

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