As the Chief FX Strategist at Scotiabank, Shaun Osborne notes that the preliminary Eurozone PMIs for August were mostly positive. The Services and Composite components showed strong advancements, with readings of 53.3 and 51.2 respectively. However, Manufacturing fell slightly to 45.6, below expectations.
French Services/Composite Data Leads the Way
Despite the overall positive outlook, it was the solid French Services and Composite data that stood out, attributed to the Olympics. In contrast, German data fell below forecasts and were weaker than in July.
EUR/USD experienced some volatility in response to the news, but ultimately eased back as markets digested the details. The ECB also released wage data for Q2, showing a decrease in negotiated wage gains to 3.6% Y/Y from 4.7% in Q1.
Currently, EUR/USD is consolidating with a more neutral price action. Short-term trend support is at 1.1140, but corrective losses are not expected to extend much below 1.1050/75 at this time.
Analysis:
The Eurozone’s strong Services and Composite data signal positive economic growth, despite some weakness in Manufacturing. The market reaction to this news may cause fluctuations in EUR/USD, but overall, the currency pair is expected to remain relatively stable. Investors should keep an eye on future data releases and ECB announcements for further insights into the Eurozone’s economic health and potential investment opportunities.