ECB Will Be Watching Manufacturing & Services PMI Data

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After two days that were lacking fundamentals across the board, all eyes will be headed toward the European session ahead as we await a collection of economic releases from most European countries. This is set to have a notable impact on the markets ahead of the key event later tonight from the US – FOMC Meeting Minutes. In this article, we will take a look at the upcoming economic releases in Europe and how they might impact the markets.

Definitions

Manufacturing PMI: The level of a diffusion index based on surveyed purchasing managers in the manufacturing industry. A result above 50.0 indicates industry expansion while below 50.0 indicates contraction. There are 2 versions of this report, released about a week apart, flash and final. The flash release, which the source first reported in Mar 2008, is the earliest and thus tends to have the most impact.

Services PMI: This index measures the level of a diffusion index based on surveyed purchasing managers in the services industry. A result above 50 indicates industry expansion and below 50.0 indicates contraction. It’s the same as the Manufacturing PMI but for the services sector.

Why Is This Important?

Both indices are considered leading indicators of economic health. Businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy.

In summary, it is a survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The services index is also the same as the Manufacturing PMI, but it surveys about 300 purchasing managers.

Expectations

Indicator

Forecast

Prior

French Flash Manufacturing PMI

51.5

51.8

French Flash Services PMI

52.1

51.4

German Flash Manufacturing PMI

54.8

55.0

German Flash Services PMI

54.1

54.2

EU Flash Manufacturing PMI

53.2

53.5

EU Flash Services PMI

53.1

52.8

Looking at the table above, we can see that the expectations for both the Manufacturing PMI & Services PMI for the month of October are softer than the previous readings in September. The exception is the French Services PMI, which is set to rise further to the highest level in three months. Yet, these figures have always come in with surprises. Therefore, estimates might not be accurate.

What Matters The Most?

All of the figures matter today, with no exception. However, these are composite figures. Therefore, traders need to look at the components, especially the New Orders, Inventories and Employment, and not only the composite index.

What About ECB?

The ECB Will be watching these figures very carefully over the coming hours because, in the past few months, the PMI data showed some improvement, especially after the ECB introduced the QE program. Further improvement today would keep the estimates higher for a possible end of QE on time (March of 2017), while weaker data would reignite the expectations for a QE extension which might be announced at December’s meeting.

Levels To Watch

Symbol

S3

S2 S1 Pivot R1 R2

R3

EURUSD

1.0505

1.0543 1.0584 1.0622 1.0663 1.0701

1.0742

EURJPY

116.70

117.01 117.56 117.87 118.42 118.73

119.28

EURGBP

0.8425

0.8458 0.8506 0.8539 0.8587 0.8620

0.8668

EURCHF

1.0662

1.0682 1.0714 1.0734 1.0766 1.0786

1.0818

EURCAD

1.4089

1.4140 1.4211 1.4262 1.4333 1.4384

1.4455

EURAUD

1.4187

1.4258 1.4307 1.4378 1.4427 1.4498

1.4547

EURNZD

1.4901

1.4945 1.4995 1.5039 1.5089 1.5133

1.5183

BTCEUR

678.38

685.24 696.28 703.14 714.18 721.04

732.08

 

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