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

German/ Eurozone flash PMIs Overview

Amongst the Euro area economies, the PMI reports from Germany and Eurozone as an entire bloc hold more relevance, in terms of its impact on the European currency and the markets as well.

The forecast for the Eurozone flash manufacturing PMI shows 56.3 for August, slightly lower than the 56.6 recorded a month ago, and the Eurozone services sector is expected to remain unchanged at 55.4 as seen in July.

The flash manufacturing PMI for Germany is expected to tick lower to 57.7, when compared to the final 58.1 result booked previously. While, the index for the services sector is expected to improve to 53.4 in August, against 53.1 last.

How could affect EUR/USD?

A positive surprise in the manufacturing PMI reports could offer the much-needed impetus to the EUR bulls, taking the rate back towards 1.1800 levels, beyond which 1.1830 (key resistance zone) could be tested, paving way for a test of 1.1846/50 (Aug 11 high/ psychological levels). 

On the flip side, if the readings show a big-than expected drop, the spot could drop below 1.1700 (round number), below which 1.1662 (3-week lows) could be tested.

However, the reaction to the data releases may remain limited, as the sentiment around the Euro is likely to be driven by the ECB President Draghi’s speech scheduled at 0700GMT.

Key notes

Eurozone: PMIs and Draghi in focus - TDS

EUR/USD Forecast: struggled to build on descending channel break-out, EZ PMIs in focus

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.