Germany is bringing the Eurozone economy down
August 24, 2016As the research company Markit released its monthly PMI gauges on the Eurozone, the investors collect another evidence that Brexit could only have a limited impact on the European Union, so far. The composite PMI in the 19-countries expanded to a 53.3 point in August, being up by 0.1 points from July. The analysts initially expected the readings to drop to a 53.1 level.
The index growth was mainly driven by the expansions of the services sector, while the activity in the manufacturing sector slowed down. The services PMI rose to 53.1 points, which was 0.3 points above the projections. At the same time, the manufacturing PMI fell to a 51.8 missing the analysts’ estimate of 52 points. The upbeat change in the services sector activity could be a signal of the growth in the consumer spending, which improved the outlook for the EU economic growth.
The service PMI in the Germanys main driver of the EU economy fell to 53.3 points, which is 1.0 point worse than previously expected while the manufacturing PMI saw no changes. Nevertheless, Services and Composite PMI in France rose to 52.0 and 51.6 points respectively, which showed growth well above projections.
The European shared currency fell against the Dollar as the weak German PMI sparked concerns about the country’s general growth. The EUR/USD dipped to 1.1280 but pared declines later, rising to a 1.1341 level.
The GBP/USD extended its rally, which started on Monday gaining 0.40%, the pair stalls near a 1.32 level waiting for important economic updates.
The USD/JPY resumed the declines as the Kuroda’s speech at BoJ Fintech Conference baulked the hopes of the investors about the Olympic Games in 2020. This shows that the Japanese Central bank is possibly running out of ammo.
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