Euro Pulls Back Despite Strong German, Eurozone PMIs
January 24 2020 - 1:25AM
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The euro came off from its early highs against its most major
rivals in European deals on Friday, despite strong flash PMI
readings from Germany and Eurozone.
Survey data from IHS Markit showed that the euro area private
sector grew at the same moderate pace as seen in the final month of
2019.
The composite output index held steady at 50.9 in January. A
score above 50 indicates expansion in the sector. The score was
expected to rise to 51.1.
Separate data showed that Germany's private sector gained
momentum in January as services activity grew at the fastest pace
in five months amid a slower decline in manufacturing.
The flash composite output index rose more-than-expected to 51.1
in January from 50.2 in December. This was the highest score in
five months and above forecast of 50.5.
The euro has been under pressure after ECB President Christine
Lagarde struck a slightly dovish tone than some had expected.
Lagarde reiterated hat risks surrounding the euro area growth
outlook remain tilted to the downside.
The euro fell to near a 2-month low of 1.1032 against the
greenback, from a high of 1.1062 hit at 3:30 am ET. The next
possible support for the euro is seen around the 1.08 level.
The euro pared gains to 120.84 against the yen, from a high of
121.26 set at 3:30 am ET. The euro is seen finding support around
the 118.00 region.
Data from the Ministry of Internal Affairs showed that Japan's
inflation accelerated in December but remained well below the 2
percent target.
Consumer price inflation increased to 0.8 percent in December
from 0.5 percent a month ago. This was also above economists'
forecast of 0.7 percent.
The euro dropped back to 1.0710 against the franc in subdued
trading. On the downside, 1.06 is possibly seen as the next support
level for the euro.
In contrast, the euro appreciated to 0.8432 against the pound,
off its early more than a 5-week low of 0.8386. If the euro rises
further, it may find resistance around the 0.86 region.
Survey results from IHS Markit and Chartered Institute of
Procurement & Supply showed that the UK private sector returned
to growth in January driven by a sharp rise in new work.
The composite output index rose to a 16-month high of 52.4 in
January from 49.3 in December.
Looking ahead, Canada retail sales for December and Markit's
U.S. manufacturing PMI for January are scheduled for release in the
New York session.
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