23.09.2019: EU economic reports provide worrisome signs (EUR/USD, GBP/USD)

The latest reports from Markit Economics provided more signs of a global economic slowdown. Today the preliminary PMI reports were published in the key economies. The report on manufacturing activity in Germany, the EU biggest economy, was the most interesting one. Since February, the Purchasing Managers’ index has been signalling contraction in the sector, and today analysts expected continuation of the negative dynamics. The consensus forecast suggested that the PMI reading would remain below 50 level near 44.4 points. However, the actual reading plunged even lower than expected, hitting the level of 41.4 points. This result was the worst in the past 10 years. Further on, the composite PMI report from Germany was downbeat as well. In France and other EU countries, the PMI readings remained in the expansion zone but came out worse than expected. Obviously, the ongoing trade war between the United States and China has a bad effect on the economic development. While Washington and Beijing are trying to organize new meetings in order to resume negotiations and resolve the conflict, investors are waiting for real actions from the ECB that could boost the economy. The euro-dollar pair returned to the area below the psychological level of 1.1000 amid weak macroeconomic statistics from the eurozone and yet another reminder of the necessity for lower interest rates and continuation
of the assets purchases program. The pair was moving towards 1.0950. A break of this level may push EUR/USD even lower towards the yearly lows. The pound sterling is also under bears’ control today. The pound-dollar pair was moving towards support at 1.2400. The British currency is weaker than its American counterpart as the latter gained ground on the back of risk aversion. Besides, the US dollar is stronger as market participant expect the Federal Reserve to put on hold rate cuts this year. That is all for now. We wish you profitable deals and hope you will stay tuned to our channel. In the nearest future, we will tell you about the market developments during the American trading session. See you soon!

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