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July 22, 2021

23/07 EUR PMI: What To Expect

Bart Kurek

Look out traders! On Friday the 23rd of July, the Euro will be printing their monthly PMI data so here's what to expect...

The Purchasing Managers' Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors. It consists of a diffusion index, which essentially summarises market conditions viewed by purchasing managers if they are expanding, staying the same or contracting. The PMI aims to provide information about current and future business conditions to company decision-makers, analysts, and investors.

The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A reading below 50 represents a contraction, and a reading at 50 indicates no change compared to the previous month. The further away from 50, the greater the level of change.

Summary of Previous Report:

  • France contracted in Manufacturing PMI printing at 58.6 in May vs 59.4 in April
  • France expanded in Services PMI printing at 57.4 in May vs 56.6 in April
  • Germany expanded in Manufacturing PMI printing at 64.9 in May vs 64.4 in April
  • Germany expanded in Services PMI printing at 58.1 in May vs 52.8 in April
  • The Eurozone stayed the same in Manufacturing PMI printing at 63.1 in May vs 63.1 in April
  • The Eurozone expanded in Services PMI printing at 58.0 in May vs 55.2 in April

As a whole, the Euro has expanded significantly in their PMI readings. The Eurozone is doing very well combatting the pandemic and the crisis it's caused on their economy. However, we're now beginning to see a significant recovery.

What's Expected Now:

  • France to contract in Manufacturing PMI from 59.0 in May to 58.4 in June
  • France to expand in Services PMI from 57.8 in May to 58.7 in June
  • Germany to contract in Manufacturing PMI from 65.1 in May to 64.2 in June
  • Germany to expand in Services PMI from 57.5 in May to 59.4 in June
  • The Eurozone to contract in Manufacturing from 63.4 in May to 62.6 in June
  • The Eurozone to expand in Services PMI from 58.3 in May to 59.4 in June

We're expecting to see another round of potential declines in Manufacturing PMI's all round, however we're also expecting to see another round of potential inclines in Service PMI's all round too. This could potentially mean we won't see a very one-sided direction following the results as half is expected to be good news, and the other half is expected to be bad news.

Impact on EUR/USD:

If the results come out as expected, I'm expecting high volatility in both directions. As mentioned, this is mainly because we're expecting a decline in Manufacturing PMI but an incline in Service PMI's. So it's good news mixed with bad news. There likely will be spikes, but I'm expecting this is both directions. I would suggest looking out for the released actual numbers before deciding to trade this event.

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