When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?

German/ Eurozone flash PMIs Overview

Amongst the Euro area economies, the German and the composite Eurozone PMI reports hold more relevance, in terms of its impact on the European currency and the related markets as well.

The forecast for the Eurozone flash manufacturing PMI shows 53.0 for October, lower than previous month's reading of 53.2, and the Eurozone services sector PMI is expected to drop to 54.5 in the reported month versus 54.7 last.

The flash manufacturing PMI for Germany is also expected to drop to 54.3 when compared to the final 54.7 result booked previously. While, the index for the services sector is seen arriving at 55.5 this month, down from 55.9 seen in the previous month.

How could they affect EUR/USD?

An upside surprise in the manufacturing PMI readings could offer the much-needed respite to the EUR bull, which could lift the EUR/USD pair back towards the 1.1500 level (round number). A break above which the recovery momentum could gain traction, with eyes set on 1.1528/36 (Sept 18, 19 highs). A sustained break above the last could open doors for a test of 1.1600 (psychological levels).

On the flip side, if the readings show a big-than expected drop, the spot could extend the losses towards 1.1430 (key support), below which the next supports are placed at 1.1400 (round number) and 1.1365 (Aug 17 low).

Key Notes

Market themes of the Day: Eurozone PMIs and Bank of Canada rate hike is due

Eurozone: Downside risk for manufacturing PMI – Danske Bank

Euro area flash composite PMI to decrease to 53.8 in September - Nomura

About German/ Eurozone flash PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.