EUR slumps as German manufacturing contracts further still
In this morning's PMI releases out of Europe, all eyes were on the German manufacturing index, which was already inside contractionary territory at 47.6. However, the index has dropped close to 3 points to 44.7 in what are clear signs that Germany's industrial sector is really feeling the pressure from slower global demand, trade tensions and also likely Brexit. Services came in at 54.9, which was still down from the previous index reading of 55.3, though better than expected.
We also saw France posting sub 50.0 readings for both manufacturing and services, recording 48.7 for both indices, rounding off a morning of poor data out of Europe.
No surprise then that the EUR has taken a sharp hit, dropping from pre 1.1400 levels to a little shy of 1.1300. We note some demand below the figure level here, though it is very hard to ignore these numbers and we may well see a push for the mid 1.1200's later on.
EUR/CHF also reacted sharply, taking out earlier lows just ahead of 1.1260 to dip under 1.1250. We note support ahead of 1.1200 here.
Lower levels for EUR/GBP also. However, the slower move means that Cable has been dragged lower with EUR/USD, as Brexit fears add a little more support to the cross rate ahead of another big week in the UK next week.