BREAKING: Mixed PMI readings from Germany and France

Germany:

• Preliminary PMI for Manufacturing: 49.2 (expected: 49.5; previously: 49.0)
• Preliminary PMI for Services: 50.1 (expected: 50; previously: 49.7)

France:

• Preliminary PMI for Manufacturing: 48.4 (expected: 48.4; previously: 48.1)
• Preliminary PMI for Services: 49.7 (expected: 49.6; previously: 49.6)

Germany's Composite PMI largely met expectations, with services showing the first increase in new business in nearly a year. While manufacturing remains below 50, it continues to expand output and sees rising export orders, signaling a cautious recovery. Inflationary pressures are also easing, supported by a stronger euro. HCOB economists maintain a "relatively solid growth" forecast for Q3, driven by both industrial and service sectors.

Conversely, French PMIs mostly stayed below the 50-point contraction threshold, despite marginal improvements. While services activity saw an 11-month high, new orders declined significantly, and business confidence plummeted to its lowest since last November. HCOB highlights ongoing economic and political pressures, with domestic uncertainty from austerity proposals and global trade protectionism clouding the outlook.

Despite these releases, neither EURUSD nor the DAX index have shown significant reactions. This muted response likely stems from the substantial gains seen yesterday, suggesting that much of the positive sentiment may have already been priced in. Markets may be awaiting further catalysts. It should be remembered that early afternoon ECB will release its decision about interest rates and it should be a crucial for the next move on the euro and european indices. 

DE40 stays close to all-time high ahead of the ECB decision which should be crucial for the next move. Source: xStation5