Euro falls hard after the EU releases weak PMI numbers
The euro declined sharply after data from Europe showed that the economy could be weaker than expected. In France, the manufacturing PMI declined to the contraction zone of 49.8 from last month’s 51.5. The services PMI also contracted to 48.7, from last month’s 50.2. This made the composite PMI drop to 48.7. In Germany, the manufacturing PMI declined to 44.7, which was lower than the expected contraction of 48. For the European Union region, the manufacturing PMI declined to 47.6, which was lower than the expected 49.5. The composite PMI declined to 51.3 All this data took investors by surprise because there was an expectation that the activity had improved in February.
The Canadian dollar eased against the USD after mixed economic data from the country. In January, the core retail sales rose by 0.1%, which was worse than the expected 0.2%. The inflation numbers showed some improvements, with the headline CPI number growing by 1.5%, which was above the expected 1.4%. On a monthly basis, consumer prices rose by 0.7%, which was higher than the expected 0.6%. The trimmed CPI rose by 1.9%, which was better than expected while the core CPI growth of 1.5% was unchanged from that of December.
In the United Kingdom, Theresa May found revolt within her Party after her decision to extend the Article 50 exit period. Many party members said that they expected the Prime Minister to perform better in Brussels. There are expectations that Mrs May will need to resign if her deal fails in the vote next week. In her defense, she has been between a rock and a hard place. The members have continually rejected her bills and voted against having a no-Brexit deal.
In the United States, the low PMI story continued. Data from IHSmarkit showed that the manufacturing PMI in February declined to 52.5, which was lower than the expected 53.5. This was the lowest level since August 2017. The services PMI too declined to 54.8, which was lower than the expected 55.7. On a positive note, the home sales were better than expected. The existing home sales rose by 11.8%, which was better than the expected 2.2%. During the month, the numbers rose by 5.51 million, which was higher than the expected 5.10 million.
The GBP\USD pair rose today as the March 9 deadline neared. The pair rose to a high of 1.3177, which was higher than the yesterday’s low of 1.3000. This price is along the upper band of the Bollinger Bands while the average directional index declined to 18. The price is also slightly above the 21-day moving average while the Average True Range indicator has declined. The pair will likely be volatile in the coming week as the deadline near.
After falling earlier in the week, the price of gold rose in the past two days after central banks turned dovish. The XAU\USD pair reached a high of 1313. On the hourly chart, the price is between the upper and middle Bollinger Bands. The price is also above the important diagonal line shown below while the MACD is turning bullish. Gold could continue moving higher as central banks postpones their decision to hike rates this year.
The EUR\USD pair declined sharply after the EU released weak economic numbers. The pair dropped to a low of 1.1288, which was slightly above the 38.2% Fibonacci Retracement level. On the hourly chart, this price is below the 21-day and 42-day moving average while the price is below the lower line of the Bollinger Bands. The RSI is below the oversold level.