Partner Center Find a Broker

The euro was on the receiving end of a severe beat-down and was the worst-performing currency of the morning London session, thanks to the latest batch of PMI reports for Germany, France, and the Euro Zone as a whole, which all failed to meet expectations.

The pound was also on under bearish pressure and was the second worst-performing currency, likely because of fears of a Brexit deadlock after E.U. leaders refused to offer support to British PM Theresa May.

The main winners of the session, meanwhile, were the safe-havens yen and Greenback, very likely because of the risk-off vibes in Europe.

  • German WPI m/m: 0.2% vs. 0.3% previous
  • French flash manufacturing PMI: 49.7 vs. 50.7 expected, 50.8 previous
  • French flash services PMI: 49.6 vs. 54.8 expected, 55.1 previous
  • German flash manufacturing PMI: 51.5 vs. 51.7 expected, same as previous
  • German flash services PMI: 52.5 vs. 53.4 expected, 53.3 previous
  • Euro Zone flash manufacturing PMI: 51.4 vs. 51.9 expected, 51.8 previous
  • Euro Zone flash services PMI: 51.4 vs. 53.4 expected, same as previous

Major Events/Reports:

Disappointing Euro Zone PMI reports

Markit released the latest batch of PMI reports for Germany, France, and the Euro Zone as a whole. And, well, they were rather disappointing and reinforced the ECB’s not-so-upbeat outlook for the Euro Zone economy.

As for specifics, France’s manufacturing PMI dropped from 50.8 to a 27-month low of 49.7, a steeper drop compared to expectations for a slight dip to 50.7.

France’s services PMI reading, meanwhile, slumped from 55.1 to a 34-month low of 49.6, which is also a much harder drop compared to the consensus that it would only ease to 54.8.

And the future for the French economy doesn’t look very promising since “new business across the French private sector fell for the first time since June 2016” and business confidence plunged “to its lowest level for three years.”

Next, Germany’s manufacturing PMI eased to a 33-month low of 51.5 instead of improving holding steady at 51.7 as expected.

Germany’s services PMI reading also deteriorated, falling from 53.3 to a 7-month low of 52.5 and contrary to expectations that it would tick higher to 53.4.

And like France, the outlook for Germany’s economy was not too bright since “overall inflows of new business edged closer to stagnation, rising only fractionally and at the slowest rate for four years.”

Also, exports “fell for the fourth month running, led by a further decline in manufacturing export orders.”

Moreover, business confidence “was the lowest recorded for over four years, as sentiment among the country’s services firms showed a further deterioration to the weakest since October 2015.”

As for the PMI reports for the Euro Zone as a whole, the manufacturing PMI reading weakened from 51.8 to a 34-month low of 51.4 instead of improving slightly to 51.9.

The services PMI reading, meanwhile, slumped from 53.4 to a 49-month low of 51.4 instead of holding steady.

And since both manufacturing and services sectors deteriorated further, the composite PMI also dropped from 52.7 to a 49-month low of 51.3.

And scanning quickly through the details, they don’t really help much. As for some deets, Markit found that new orders growth “registered the smallest increase since December 2014.”

New exports orders, meanwhile, “fell for the third successive month, recording the steepest decline since the series began over four years ago.”

Moreover, “monthly job gain was the smallest for two years.”

The inflation situation also doesn’t look good since “Cost pressures remained elevated but eased to the weakest since April,” while “Output price inflation … cooled to the lowest since September of last year.”

Risk-off ending in Europe

Europe is closing out the week with a bout of risk aversion which sent the major European equity indices broadly lower.

And market analysts were blaming the risk-off vibes on the ECB’s downgraded growth forecasts, which raised concerns about the Euro Zone’s growth prospects, as well as the poor reading for Chinese industrial production from the earlier session.

  • The pan-European FTSEurofirst 300 was down by 0.85% to 1,368.35
  • Germany’s DAX was down by 0.82% to 10,834.87
  • The blue-chip Euro Stoxx 50 was down by 0.90% to 3,084.15

Major Market Mover(s):


The euro endured a heavy pounding during the session, thanks to the latest batch of disappointing PMI reports.

EUR/USD was down by 66 pips (-0.59%) to 1.1288, EUR/CHF was down by 27 pips (-0.25%) to 1.1258, EUR/JPY was down by 74 pips (-0.58%) to 128.20


The pound already suffered from bearish pressure during the earlier session, thanks to E.U. leaders giving British PM Theresa May the cold shoulder. And during the morning London session, the pound was forced to extend its losses and was the second worst-performing currency.

There were no fresh negative catalysts, but market analysts were still pointing to fears of a Brexit deadlock after E.U. leaders refused to support Theresa May.

GBP/USD was down by 59 pips (-0.46%) to 1.2569, GBP/CHF was down by 17 pips (-0.14%) to 1.2534, GBP/JPY was down by 65 pips (-0.45%) to 142.74


The safe-havens yen and Greenback were the top-performing currencies of the session, likely because of the risk-off vibes in Europe.

And between the two, it was the Greenback that (barely) had the upper hand … for now.

USD/CHF was up by 34 pips (+0.34%) to 0.9973, NZD/USD was down by 3 pips (-0.05%) to 0.6790, AUD/USD was down by 15 pips (-0.21%) to 0.7162

USD/JPY was up by 2 pips (+0.02%) to 113.56, NZD/JPY was down by 3 pips (-0.03%) to 77.13, AUD/JPY was down by 16pips ( -0.20%) to 81.34

Watch Out For:

  • 1:30 pm GMT: Headline (0.1% expected vs. 0.8% previous) and core (0.2% expected vs. 0.7% previous) readings for U.S. retail sales report
  • 2:15 pm GMT: U.S. industrial production (0.3% expected vs. 0.1% previous)
  • 2:15 pm GMT: U.S. capacity utilization rate (78.6% expected vs. 78.4% previous)
  • 2:30 pm GMT: CB’s leading U.K. index (-0.4% previous)
  • 2:45 pm GMT: Markit’s flash U.S. manufacturing PMI (55.1 expected vs. 55.3 previous)
  • 2:45 pm GMT: Markit’s flash U.S. services PMI (54.7 expected, same as previous)
  • 3:00 pm GMT: U.S. business inventories (0.6% expected vs. 0.3% previous)