The euro held its ground against the US dollar in morning trade, Tuesday. It gained support from the release of the preliminary purchasing managers index (PMI) for the euro zone.
Data firm Markit’s closely watched release showed the Euro Zone composite PMI edged downwards to 55.9 in October from September’s 56.7. However, a figure above the key 50 level shows the economy is expanding and despite the slowdown, Tuesday’s figure places the euro zone firmly in expansionary territory.
That was good enough to help keep the euro steady-to-a-little-higher against the US dollar and the British pound.
The euro zone-wide PMI was boosted by a faster pace of growth in France. Meanwhile, the manufacturing sector was also positive, with the euro zone preliminary manufacturing PMI rising to an 80-month high of 58.6 from September’s 58.1.
Details showed incoming new work and job creation were both strong during October. Export orders helped push the incoming new work measure upwards.
“The eurozone economy has had a good year so far, and the initial signs are that this has continued at the start of the final quarter of 2017,” said IHS Markit associate director, Andrew Harker.
“After signalling a 0.7% increase in GDP in Q3, the pace of expansion looks to be staying around this mark as the year draws to a close,” he added.
Supportive of ECB plans
Despite signalling a minor slowdown in the pace of growth, the preliminary PMI remains supportive of planned European Central Bank (ECB) action to reduce its bond purchasing programme.
The ECB is meeting this week to discuss plans to slow its bond purchasing programme, after years of support for the ailing economy begin to paying off.
The central bank currently buys around €60 billion euros of bonds each month to help stimulate the economy. Now there are signs of a sustained recovery, it is planning on reducing that amount by as much half in 2018.