Summary:
-
More weak PMI data from across EU
-
EURUSD dips lower
-
ECB decision 12:45 (BST). Final Draghi press conference to follow
In a week that has been dominated by politics, the only real important top tier economic releases have served to reaffirm the notion that the Eurozone economy continues to struggle. A series of industry surveys from across the continent have been released this morning and while on balance they were not really any worse than expected, this is more due to pessimistic forecasters rather than solid data.
Start investing today or test a free demo
Open real account TRY DEMO Download mobile app Download mobile appThe Eurozone wide manufacturing PMI came in at 45.7 for the current month, inline with the upwardly revised September reading which together are the joint lowest prints for this metric in 7 years - since the height of the debt crisis. Slowing activity in the manufacturing sector has been a theme for much of the year and is something of a global phenomenon, so this should come as little surprise but the main fear is that this slowdown begins to spread to the service sector. In this regard the Eurozone wide measure is still just about holding up ok but there are signs of softening in the bloc’s largest economy with the German services PMI falling to a 3-year low and the prior reading also seeing a sizable decline.
In terms of the market reaction it has been remarkably sanguine with the German Dax pulling back a little after earlier hitting a 16-month high while there’s been some small scale selling seen in the single currency. The muted response could be due in part to the ECB rate decision at lunchtime, but expectations are low for any strong messages on the policy front after the previous decision saw a new stimulus package unveiled.
EURUSD has pulled back a little since the data was released with price coming up short of the 200 SMA once more. Source: xStation
Draghi to bow out
In all likelihood the biggest takeaway from the ECB decision later will be that it marks the last meeting for president Mario Draghi with the Italian set to step down after 8 years at the helm. The standout memory for many will be the famous “whatever it takes” speech delivered less than a year into his tenure and while he still has his critics, there is little doubting that the Eurozone economy is left in a better state than where it was when he took the position. You could say that in the intervening years the Governing Council have done almost everything they can to promote growth with another round of quantitative easing set to begin next month but there is a feeling that monetary policy is starting to push up against its limits. When announcing the new easing measures last month, Draghi was keen to stress that the bloc now needs support on the fiscal front and it is no surprise that his successor Christine Lagarde is seen as politically savvy and therefore well placed to attempt to bring about this coordinated policy response.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
