EURUSD Below Pre-Fed Levels

March 22, 2019

By Orbex

German PMI Falls to Near 6-Year Low

Earlier, data from Europe saw German and French PMIs falling back into contractionary levelsGermany‘s Flash manufacturing PMI declined to 44.7, a near 6-year low. Meanwhile, services came out somewhat steady at 54.9.

Analysts had projected Manufacturing would increase from 47.6 to 48.0. However, expectations were missed on the back of weakness in business activity inflows.

French Services and Manufacturing PMIs both depreciated into contraction levels at 48.7 and 49.8, respectively. IHS Markit reported that input cost inflation was down for the 3-month period leading to March. In addition, outstanding business deteriorated amid a slowdown in demand and a weakening activity in exports.

What’s Next for the Day?

With European data out of the way, market participants can keep an eye on Canada’s CPI inflation and Core Retail Sales.


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Expectations are for Canadian CPI to rise from 0.1% in February to 0.6% in March. Keeping in mind the Bank of Canada’s dovish shift earlier this month, pressures on Loonie could be sustained. However, last month’s acceleration on airfares saw year-on-year inflation ending 2018 at the BoC’s target. With that, economists now expect prices to inflate more than previously anticipated. And that is despite last month’s dive to 1.4% (YoY), that was owed to still-negative gasoline prices.

While the BoC followed the Fed and reiterated a wait-and-see approach, Retail Sales expectations for February paint a positive picture. Wage growth supports a better outlook as year-on-year it rose at 1.8% rate, only 10 basis point below November’s figure. A good inflation growth will likely lead to more spending, somewhat justifying analyst expectations. However, a 0.2% rise from a recessionary -0.5% may be quite a jump for the core figures.

US Existing Home Sales Expected to Improve

Based on housing economists, Existing Home Sales are expected to decline only by -0.8% on a month-to-month basis, compared to -1.2% in February. The month before, home sales fell to a November 2015 low, below expectations of -0.1% at -4.0%. Data for the month suggest a rise as single-family sales and inventory for sales are up.

By Orbex