When are the German/ Eurozone flash PMIs and how could they affect EUR/USD?

German/ Eurozone flash PMIs Overview

Amongst the Euro area economies, the PMI reports from Germany and Eurozone as an entire bloc hold more relevance, in terms of its impact on the European currency and the markets as well.

The forecast for the Eurozone flash manufacturing PMI shows 60.3 for January, slightly lower than the 60.6 recorded a month ago, and the Eurozone services sector is expected to come in a tad weaker at 56.4 in the reported month when compared to 56.6 booked in December.

The flash manufacturing PMI for Germany is also expected to tick lower to 63.0 when compared to the final 63.3 result booked previously. While, the index for the services sector is expected to drop to 55.6 in January, against 55.8 last.

How could affect EUR/USD?

A positive surprise in the manufacturing PMI reports could add extra legs to the ongoing rally in the EUR, opening doors for a test of 1.2376 (161.8% Fib extension of the Nov low - Nov high - Dec low), beyond which the 1.2400 mark will be tested, opening doors towards 1.2431 (monthly 200-MA).

On the flip side, if the readings show a big-than expected drop, the spot could drop below 1.1800 (round number/ 100-DMA), below which 1.1769/67 (5 & 10-DMA) could be tested.

The reaction to the PMI releases may remain limited, as markets remain focused on the ECB policy decision due tomorrow at 1245 GMT. 

Key notes

Germany: Manufacturing PMI to print another cyclical high of 64.0 in January - TDS

EUR/USD Forecast: fresh 3-year tops and counting ahead of EZ PMIs

About German/ Eurozone flash PMIs

The Manufacturing Purchasing Managers Index (PMI) released by the Markit Economics captures business conditions in the manufacturing sector. As the manufacturing sector dominates a large part of total GDP, the manufacturing PMI is an important indicator of business conditions and the overall economic condition in the Euro Zone. Usually, a result above 50 signals is bullish for the EUR, whereas a result below 50 is seen as bearish.