EUR/USD retreats to 1.1250 on PMIs
After hitting fresh multi-week tops in the boundaries of 1.1300 the figure overnight, the pair has surrendered part of those gains and has returned to the 1.1250/45 area in response to the mixed preliminary PMIs from France and Germany.
Spot continues to derive support from diminishing market expectations of a Fed’s lift-off in September – now with December as the most likely candidate – following the dovish tone from the FOMC minutes on Wednesday.
On the Greek front, market participants perceive Tsipras stepping down as EUR-supportive as well, as that could facilitate the negotiations with the international creditors. .
German flash manufacturing PMI in August prints at 16-month high
The preliminary German manufacturing PMI in August rose to a 16-month high of 53.2 from July’s 51.8.
The services PMI dropped to a three-month low of 53.6, restricting the composite index to a 4-month high of 54.00. The Markit report shows, “New orders placed with German private sector companies also rose at a faster pace in August. Goods-producers reported the sharpest rise in new export orders in one-and-a half years. The rate of job creation accelerated to a 44-month high.”
On the price front, companies reported a sixth successive monthly rise in input costs in August. Output prices also rose further during August, with the rate of inflation the highest in three months.
Pound falls to 2-week lows vs. stronger dollar
The pound fell to two-week lows against the U.S. dollar on Tuesday, as expectations for a U.S. rate hike in the coming months continued to lend broad support to the greenback.
GBP/USD hit 1.5385 during European morning trade, the pair’s lowest since May 8; the pair subsequently consolidated at 1.5415, sliding 0.36%. Cable was likely to find support at 1.5241, the low of May 8 and resistance at 1.5591, the high of May 20. The dollar was boosted after Federal Reserve Chair Janet Yellen reiterated Friday that the bank still expects to start raising interest rates later in the year if the economy continues to improve as expected.
| Important events and their explanation: |
| Time ( IST) | Currency | Economic Data | Actual | Expectation | Previous |
| CNY | Caixin Flash Manufacturing PMI | 48.1 | 47.8 | ||
| 12:30pm | EUR | French Flash Manufacturing PMI | 48.6 | 49.8 | 49.6 |
| EUR | French Flash Services PMI | 51.8 | 52.1 | 52 | |
| 1:00pm | EUR | German Flash Manufacturing PMI | 53.2 | 51.7 | 51.8 |
| EUR | German Flash Services PMI | 53.6 | 53.7 | 53.8 | |
| 1:30pm | EUR | Flash Manufacturing PMI | 52.3 | 52.4 | |
| EUR | Flash Services PMI | 54.1 | 54 | ||
| 2:00pm | GBP | Public Sector Net Borrowing | -2.3B | 8.6B | |
| 7:15pm | USD | Flash Manufacturing PMI | 53.9 | 53.8 |
Explanation:- Above China’s data might further dampen the Importer’s move. China might further devalue there currency in the coming days and that would be bad for the INR.
| Quick Glance : |
| Instrument | Price | %Chg | Volume | OI |
| USD/INR | 65.80 | 0.17 | 788526 | 960103 |
| EUR/INR | 74.16 | -0.82 | 37048 | 48836 |
| GBP/INR | 103.54 | 0.07 | 21059 | 41217 |
| JPY/INR | 53.64 | -0.64 | 7908 | 15311 |
| Technical touch : |
As seen pair has pierced its prolonged Ascending triangle and trading above crucial 64.50 levels.
After a surprise move by the Chinese banks rupee depreciated and touched 64.80 levels. We assume rupee might take some breath near 65.81 levels and appreciate till 65.30 levels. But we expect 66.30 is not far enough too.