EUR/USD falls sharply despite green figures for German manufacturing and services PMI on Friday

EUR/USD falls sharply despite green figures for German manufacturing and services PMI on Friday
Written by:
Michael Harris
24th January, 15:32
Updated: 11th March, 09:06
  • German manufacturing PMI improves to 45.2 in January.
  • German services PMI posts 54.2 in January versus the analysts' forecast of 53.0
  • Eurozone manufacturing PMI improves to 47.8 in January.
  • Eurozone services PMI records 52.2 versus the analysts' estimate of 52.9.

IHS/Markit announced the German flash manufacturing and services purchasing managers’ index (PMI) on Friday. As per the report, the German manufacturing sector in January was reported to have contracted at a slower pace than expected. IHS revealed the German manufacturing PMI in January at 45.2. The figure was capped at a lower 43.7 in December, following which, analysts had anticipated manufacturing PMI to post at 44.5 in January. Friday’s figure was also reported as the highest for German manufacturing PMI in the past eleven months.

German Services PMI Hikes To 54.2 In January

On the services PMI front, the German economy expanded to 54.2 in January that marked the highest in the past five months. German services PMI was capped at 52.9 in December that had seen the experts forecasting 53.0 for January.

The German Composite Output Index also surged to 51.1 in January, as per the IHS report on Friday. Remaining under 50 and suggesting contraction, the composite output index was noted at 49.4 in December. For January, analysts were expecting a figure around 50.5. At 51.1, the composite output index also hit a five-month high in January.

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Manufacturing activity in the broader Eurozone was also announced to have improved in January. While the Eurozone manufacturing PMI remained in contraction (under 50), it improved to 47.8 in January that was branded the best in the past five months. The figure for Eurozone’s manufacturing activity in December was capped at 46.3. In a previous estimate, analysts had expected 46.8 for the Eurozone manufacturing PMI in January.

On the services PMI front, Eurozone printed 52.2 in January (two-month low). In December, Eurozone services PMI was registered at 52.8 while analysts were expecting it to remain unchanged in January.

French Services PMI Dropped To 51.7 In January

Further insight into the European economy at large was offered by French manufacturing and services PMI on Friday. French services PMI dropped to 51.7 in January from December’s 52.4. Analysts were expecting the manufacturing activity in France to be recorded at 52.2 in January. On the manufacturing front, however, France beat the forecast of 50.6 printing 51.0 for manufacturing PMI in January. In December, the figure was posted at 50.4.

Considering the mixed signals about the European economy at large, as evident in Friday’s data, the forex market responded considerably with one of the most widely traded currency pair, EUR/USD, having dropped from 1.1060 to 1.1025 following the news.

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