EURJPY, H1
Eurozone Services and Composite PMIs revised higher in the final reading for September. The former came in at 48.0, slightly stronger than the 47.6 reported initially, but still reflecting mild contraction in a sector that – even more than manufacturing – is feeling the tightening of virus restrictions amid the resurgence of new cases. Indeed, the numbers pretty much reflect virus developments.
The German number was revised up to 50.6 from 49.1 as new infection numbers continue to rise, but less than elsewhere in Europe and with restrictions actually relatively modest as the focus remains more on testing and contact tracing, which allows lockdowns to remain small. Six ticks over 50.0 may not seem much, but as Europe’s key economy and with services being the key sector, it is encouraging news, but is lower than both August and Septembers readings. The Italian services PMI improved slightly, even if the reading remains in negative territory, as the country remained off the quarantine list. Spain and France, which have seen a particularly heavy spike in new cases, suffered, however. Manufacturing sentiment meanwhile is improving across the board and the combination left the composite positive at 50.4 for the Eurozone as a whole, up from 50.1 in the preliminary reading. Nothing that suggests a buoyant recovery, but equally nothing to spark fears that the nascent recovery has been halted. Still, the two-speed recovery will also pose a problem for the ECB going forward.
The EUR ticked higher on the positive news, with EURUSD pushing to R1 at 1.1735, EURGBP moving down below 0.9060 and EURJPY breaching 124.00 to recover all of Friday’s losses and test towards Thursday’s high at 124.19.
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Stuart Cowell
Head Market Analyst
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