Euro Shrugs After Soft Manufacturing Data
2022.11.02 10:56
EUR/USD is in positive territory today. In the European session, the euro is trading at 0.9905, up 0.32%.
German, Eurozone Manufacturing PMIs Fall
The manufacturing sector in the Eurozone continues to struggle, as PMIs in Spain, Italy and France slowed in October and remained in contraction territory, with readings below 50.0. and PMIs also pointed to a downturn in manufacturing. Final Manufacturing PMI in Germany was revised to 45.1, down from 45.7, with the Eurozone Manufacturing PMI coming in at 47.2, revised from 47.4. With winter approaching and an energy crisis looming in Western Europe, there’s little reason to expect any significant improvement in manufacturing data.
The economic outlook remains uncertain, leaving in question what the European Central Bank has in store at the December meeting. The ECB joined the rate-hiking dance late and finds itself well behind the inflation curve, as headline inflation in the Eurozone jumped to a staggering 10.7% in October, up from 9.9% in September. The ECB has little choice but to deliver an oversize rate hike in order to tackle double-digit inflation, and ECB President Christine Lagarde said as much on Tuesday, warning that the central bank would use “all the tools we have available to bring inflation back to the ECB’s 2% target.
The focus is on the Federal Reserve, which winds up its two-day policy meeting later today. This would bring the benchmark rate to 4%. The question on the minds of investors is what happens next? The final meeting of the year is on Dec. 14 and hopes that the Fed will downshift its tightening pace at that meeting have faded, as inflation has been stickier than the Fed expected. The markets will be listening closely to Fed Chair Jerome Powell’s comments today, hopeful for some insights into what the Fed has planned for December and early 2023.
EUR/USD Technical
- EUR/USD faces resistance at 0.9956. Next, there is resistance at 1.0105
- 0.9870 and 0.9818 are providing support
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